Indians spent a record amount on foreign travel in 2022. Here's how much

India's foreign travel bills collectively never exceeded a billion dollars in a month till 2022. Then it happened six times in 2022.

On a rolling 12-month basis, the overall number touched $12.7 billion at the end of 2022. This is the highest for any one-year period for at least a decade. There are some gaps in remittance numbers before this time, but it is unlikely to have been higher. Indians spent less than $100 million in 2012. Spends have risen steadily in the last few years and more than doubled since 2019 (chart 1).

An analysis of tourism data shows that India earns significantly more from foreign tourists coming to India than what Indians spend abroad. But the difference between the two may be narrowing. For every dollar an Indian travelling abroad spent in 2015, India earned $57.5 from tourists arriving here. This fell to just $10.1 in the following year. Provisional figures for 2021 indicate that India earned $1.7 in forex for every $1 spent abroad on travel under the liberalised remittance scheme (LRS). This gap had narrowed even before the pandemic began (chart 2).

An interesting insight in the pre-pandemic numbers is that less than a quarter (23.9 per cent) of Indians travelling abroad do so as tourists. The rest went abroad for other purposes, including jobs and business reasons. The United Arab Emirates was the top destination in 2019, with 6.4 million Indians travelling there. Saudi Arabia was second with 2.9 million, followed by the US with 1.9 million. The Gulf countries and the US are also major sources of inward remittances towards India (chart 3).

Around 55 per cent of the total outgo under the LRS in 2022 was for travel. The Union Budget for 2023-24 has introduced a 20 per cent tax collection at source (TCS) provision, which could mean larger bills when going abroad.

Higher prices may give pause to some of the foreign travel and could help slow outflow relative to the amount of money coming in through tourism. But there could also be another way to achieve a similar end.

The biggest source of foreign tourists in India was Bangladesh (2.5 million arrivals) in 2019, followed by the US (1.5 million). Bangladesh tourism fell to around 0.24 million in 2021, while it was 0.43 million for the US. Provisional data suggests that there were 6.2 million foreign tourist arrivals in 2022. This is still lower than the 10.9 million arrivals seen in 2019. This indicates that the recovery in outbound tourism spending may not have translated into a similar surge for inbound numbers.

Easing the way for foreign tourists, including through more responsive visa norms, could help India better achieve its full tourism potential.

France's Louvre museum attracted nearly as many foreign tourists in 2019 as the whole of India.