Current tourism trends in India

registering a 13% CAGR as against 8% CAGR In 2006, India’s share had been 0.8% of the world market travel and tourism market . This share has risen from 0.6% in 2001, registering a 13% CAGR as against 8% CAGR for the world during the same period. Further, the WTO has forecast the Travel & Tourism Industry in India to grow by 8% per annum, in real terms, between 2008 and 2016. Foreign exchange earnings from tourism alone could show annualized growth of 14% during the same period.

Despite the burgeoning share of the Asian market, India’s total share in world tourist arrivals, however, remains a modest 0.8%, even though international arrivals to India have seen somewhat of a dramatic turnaround since 2002, when a temporary declining trend was reversed aggressively. This turnaround was the result of several factors such as Government of India’s “Incredible India” campaign, high visibility afforded to India by its economic success, the tourism industry’s constant search for new destinations, and to some extent improvement in infrastructure in specific areas (such as better air connectivity of smaller and remote destinations). The total foreign tourist arrivals in India in 2005 was around 3.92 million, registering a CAGR of 18.1% over 2002-2005 vis-à-vis world tourist arrivals which registered a growth of barely 4.76% on a larger base (See Exhibit below).

Exhibit 12 3: International Tourist Arrivals by Region (millions)


Source: World Tourism Organization

Whether measured by the yardstick of its vast tourism resources, or its emerging economic importance, India’s low share of tourism receipts and arrivals could be termed below potential.

Exhibit: Competitiveness Ranking of Nations on Factors affecting Tourism

  Overall Regulatory



Environment &


Human, cultural

and natural resources

Country Rank Rank Rank Rank
Switzerland 1 2 2 2
USA 5 33 1 12
Hong Kong SAR 6 4 14 14
Australia 13 16 10 26
Greece 24 20 32 15
Malaysia 31 27 27 57
Italy 33 42 30 32
Mauritius 39 35 46 39
Brazil 59 67 48 67
Argentina 64 85 58 45
India 65 62 55 81
China 71 78 61 93

Source: World Economic Forum, World T&T Competitiveness Report, 2007, Geneva

The Competitiveness Report notes that India has key strengths, linked mainly to cultural endowments. For instance India ranks 7th in terms of number of World Heritage sites. The country also benefits from excellent price competitiveness, and ranks 6th overall in this category. Low ticket taxes and airport charges as well as low prices (mostly for manufactured goods and not so much for the service industry in the premium range) in the economy as a whole contribute to India’s price competitiveness.

It is imperative to point out that India has the advantage of a strong domestic tourism base which was in excess of 200 million tourists in 2006. This base is likely to grow on the back of a rapidly rising middle class with increased incomes and awareness levels and is not greatly affected by the Competitiveness ranking which is primarily a comparison with other countries.

Hence despite low rankings on the Competitiveness scale, it emerges that India can leverage its higher rankings in certain categories to exploit its tourism potential over the next decade with appropriate planning and sensitivity towards the environment. Also, certain states such as Gujarat have a natural advantage due to their historical, cultural and natural endowments which could be appropriately targeted for better tourism flows.