Travel market in India projected to reach $125 billion by FY27: FICCI

  • The pandemic has shone a greater light on the structural barriers holding India’s tourism industry back from reaching its full potential. Seasonality is the biggest factor, which impacts the ability of tourism businesses to retain staff year-round and reduces economic productivity

Varuni Khosla
First Published7 Jul 2022
India is a large market for travel and tourism. It offers a diverse portfolio of niche tourism products. (Photo: Javaid Naikoo)
India is a large market for travel and tourism. It offers a diverse portfolio of niche tourism products. (Photo: Javaid Naikoo)

NEW DELHI: The travel market in India is projected to reach $125 billion by FY27 from an estimated $75 billion in FY20. India's tourism industry in 2020 accounted for 31.8 million jobs, which is likely to grow to 53 million jobs by 2029 and international tourist arrivals are expected to touch 30.5 billion by 2028. All these are findings of a new report by industry chamber Ficci.

According to the latest UNWTO World Tourism Barometer, which the Ficci  report cited, international tourism saw a 182% year-on-year increase in January-March, with destinations worldwide welcoming an estimated 117 million international arrivals compared to 41 million in Q1 2021.

India is a large market for travel and tourism. It offers a diverse portfolio of niche tourism products - cruises, adventure, medical, wellness, sports, MICE, eco-tourism, film, rural and religious tourism. India has been recognised as a destination for spiritual tourism for domestic and international tourists. Tourism is an important source of foreign exchange in India, similar to many other countries. The foreign exchange earnings from 2016 to 2019 grew at a CAGR of 7% but dipped in 2020 due to the coronavirus pandemic. 

The growing influence of the tourism sector as an economic powerhouse and its potential as a tool for development is undeniable. The tourism sector not only leads to economic growth, but also improves the quality of people’s lives with its capacity to create large-scale employment of diverse kinds, supports environmental protection, promotes diverse cultural heritage, and strengthens peace in the world.

Before the onset of the pandemic, the Indian travel and tourism industry was expected to witness an annual growth rate of 6.9% during 2019-2028 to reach $460 billion, approximately 9.9% of India’s GDP in 2028.

The total contribution of travel and tourism to the GDP in India in 2019 was 7% of the total economy or 15,792 billion. This plummeted to 4.3% or 9,167 billion in 2020. In 2021, the figure did pick up to 5.8% or 13,161 billion. 

The industry accounted for 40.10 million jobs 2019, which fell to 29.14 million in 2020, but again rose to 32.10 million in 2021.

International visitor spends, however, fell from 2532.6 billion in 2019 to 653.5 billion in 2021. Domestic tourism remained constant from 2019 to 2021, though. The contribution went from about 11,515 billion in 2019 to 7,170 billion in 2020. This figure rose to 11,166.6 billion in 2021. The Ficci report said it took this data from 'WTTC 2022 Annual Research: Key Highlights'.

The pandemic has shone a greater light on the structural barriers holding India’s tourism industry back from reaching its full potential. Seasonality is the biggest factor, which impacts the ability of tourism businesses to retain staff year-round and reduces economic productivity.

Market fragmentation, which can inhibit coordination across the sector, and lack of information are other impediments.

To enhance travel mobility, Usha Padhee, joint secretary, Ministry of Civil Aviation, said the government was working to increase the number of airports in the country to 200 by 2024 from current 140. She said aviation and tourism are complimenting sectors. “Air connectivity needs to be in tandem with what the tourism sector is doing,” she added.

G Kamala Vardhan Rao, director general, Ministry of Tourism, said there was a need to develop and showcase newer tourist destinations to attract more travellers from both domestic and international countries. “We should collectively work to ensure that new destinations come up with basic infrastructure,” he said while addressing the ‘7th National Tourism Investors Meet 2022’, organised by the federation. 

“India is going to host the G-20 meetings next year and it will be organised across various states and cities. The states are also investing heavily to build infrastructure. I urge investors to come forward and invest in the hospitality sector,” he added.

Jyotsna Suri, chairperson, FICCI Travel, Tourism and Hospitality Committee and CMD, The Lalit Suri Hospitality Group, said India needs robust domestic tourism. “We need to go beyond the areas that are unexplored. Connectivity is one of the biggest shortcomings that we have to improve,” she added.

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