To capitalize the tourism sector, India needs to unilaterally eliminate visas for at least the 50 most developed countries, and ideally extend that to most countries in the world, barring very few for security reasons
Having lived outside India for the last decade, I routinely encounter people telling me how much they would love to visit the country the moment they find out I grew up there. The conversation is quite predictable—the Taj Mahal comes up quite quickly, followed by inquiries about the Himalayas from the more adventurous, and the temples of Varanasi and Tamil Nadu from the more spiritual. If I had a dollar for every person who told me they would love to visit India, it would certainly cover my next trip to India. More importantly, if the people who expressed an interest in visiting India actually visited it, Indians would be much richer.
India has captured imaginations the world over as a country and culture, and yet only 10 million international tourists visited it last year. This is low compared to the almost 60 million international tourists who visited China and over 80 million who visited France.
Some of this could be attributed to tourists from developed countries worrying about vaccinations, safety conditions in Indian cities, or the pollution. But these are small factors as such tourists frequently travel to less developed countries to experience new cultures and sights. Both Thailand and Mexico, which recommend vaccinations and other precautions prior to arrival, receive three times the number of international visitors as India. The problem is actual barriers to entry.
Economist Alex Tabarrok has argued (in Pragati) that one of the major reasons for the relatively low share of international tourists in India is the visa requirement for citizens from most countries. Until recently (2014), this was very cumbersome, with long forms and even longer waiting periods to get a tourist visa to India. Anyone who has filled a government form in India knows how difficult they are to navigate—ranging from mild annoyances like requiring parents’ place of birth to more irritating requests like triplicate forms, multiple photographs, inconvenient consular times, and the few acceptable forms of payment. This has thankfully been changed to a simpler visa on arrival and e-visa requirement for visitors from over 160 countries.
The visa requirement for non-citizens (even the simpler version) is the hangover from the closed economy of socialist India. Along with terrible trade and immigration policies from that era, this mindset also meant a high bar for entry for any purpose for citizens of other countries and allowing only a handful of bilateral partners to enter without a visa. And there has been little effort to change this policy; after all, spontaneous tourists from other countries can never form an interest group and coordinate to lobby our government. When lobbied internally, external affairs ministers and bureaucrats routinely give the standard answer that visa restrictions will only ever be lifted bilaterally—i.e. India will only allow visa-less entry for other countries that grant Indian citizens the same privilege. On the face of it, this sounds quite symmetric and fair, mostly affecting foreigners. Yet, the ones who stand to lose the most from the visa requirement are Indians.
Robert Lawson and Sourav Roychoudhary, in their 2016 paper Do travel visa requirements impede tourist travel?, find that “having a travel visa requirement on a particular country is associated with a 70% reduction in inbound travel from that country." And India has a visa requirement for most countries in the world, except a handful of neighbours. According to the Union ministry of tourism, in 2017, international tourists spent on average $2,700 during their visit. Applied to India, Alex Tabarrok estimates that India’s visa requirements are costing India in the order of $50 billion.
To understand the benefits of visa-less travel, one needs to look no further than the domestic tourism patterns in India. The constitution guarantees Indians free movement within India, and the lack of visa or other restrictions means that there is more travel by Indians within India than by foreigners in India or by Indians to other countries (after obtaining a visa). According to the latest statistics reported by the tourism ministry, all the Indian states and union territories put together had a little over 1.6 billion domestic tourist visits in 2017. Compared to the 1.6 billion domestic tourist visits there are only 26.9 million foreign tourist visits to all the Indian states and union territories put together. Visa-less travel led 60 times more visits than travel by foreigners requiring a visa!
Visa-less domestic tourist visits have increased 7.5-fold in the last two decades. The trend shows that as Indians get richer, they like to take more and shorter vacations, and for most Indians, this means visiting tourist sites within India. Tamil Nadu and Uttar Pradesh lead the list of the most visited states, no doubt due to the Taj Mahal, Varanasi, and the ancient temples of the south. Tourism is typically prone to network effects—the more the people that visit a particular site, the more it is recognized by other tourists as a site of interest, and more people will visit that site in the future.
To capitalize on this kind of network effect, India needs to unilaterally eliminate visas for at least the 50 most developed countries, and ideally extend that to most countries in the world, barring very few for security reasons. Waiting for treaties and bilateral/multilateral lifting of restrictions takes a lot of time, and Indians stand to lose billions of rupees annually from holding on to these relics. It’s not difficult to imagine a world with no visa requirements—it is much richer, happier, and well-travelled.
Shruti Rajagopalan is an assistant professor of economics at Purchase College, State University of New York, and a fellow at the Classical Liberal Institute, New York University School of Law.
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