Tourism forex drops even as foreign arrivals rise

Tourist footfall has risen 4.3% this year, but earnings have declined 2.4%

Foreign exchange earnings from tourism have been inching up for the past five years, supported by the increasing number of overseas visitors. Calendar year 2015, however, is going to be different.

Foreign tourist arrival to India saw an increase of 4.3 per cent in the first 10 months of the current year. The rise should have reflected in the foreign exchange earnings, too. But, earnings have declined 2.4 per cent to $15.93 billion between January and October 2015. The decline compares unfavourably with a 10 per cent earnings growth (in dollars) during the first 10 months of 2014.

If one takes into account the weaker rupee, the increase in rupee terms should at least have been higher to the increase in tourist arrivals. However, the earnings in rupee terms have grown by only 2.5 per cent in the first 10 months to Rs 1,01,348 crore. The rupee earnings had risen 16 per cent during January-October last year.

Ajay Prakash, former president of Travel Agents’ Federation of India, who runs Nomad Travels, said he had not seen a slackening in demand for luxury holidays even though they account for only 10-12 per cent of inbound arrivals. “Maybe the larger inbound market is feeling the pinch somewhere. This one factor can only explain the trend of decline,” he said.

Experts say being a long-haul destination, India has to compete with top global tourist destinations to attract tourists from Europe and the US. However, the country has not been able to match the experience offered by destinations such as Dubai and, to some extent, even Oman. People from Europe and the US have an option to go to other long-haul destinations.

“The high-end tourists are not directed towards India. The tourist arrival data still count people who are visiting friends and relatives as tourists. But, are these real tourists? It is December and the Delhi streets should be buzzing with tourists. But it is not so,” said Ankur Bhatia, executive director of Bird Group, which has interest in hospitality and aviation services, among other things.

Of late, India has been seeing a sharp surge in tourist arrivals from Bangladesh and the neighbouring country has also replaced the US as the top source for arrivals in the first 10 months of 2015. Almost a million of the 7.67-million tourists who visited India last year were from Bangladesh. But, most of them visit India for medical treatments and businesses, and are not tourists in the real sense of the term.