India has significant potential for becoming a major global tourist destination. The country witnessed foreign tourist arrivals of 2.75 million in 2001.
Travel and tourism is the second highest foreign exchange earner for India, and the government has given organisations in this industry export house status. The industry is waking up to the potential of domestic tourism as well, with an estimated 4.7 billion domestic trips in 2001. Tourism spending within India in 2001 was US$ 22 billion.
There is considerable government presence in the travel and tourism industry. Each state has a tourism corporation, which typically runs a chain of hotels /motels and operates package tours, while the central government runs the India Tourism Development Corporation. Divestment of these state-run tourism corporations have either already taken place or are in process.
Incoming foreign tourist arrivals have shown a 6% compounded annual growth rate over the last 10 years. The government has realised the potential and has advanced several incentives to promote infrastructure growth in the tourism sector.
Current investments are likely to see hotel room capacity increase by 20% over the next three years, with several international hotel chains entering the hotel industry. Similar growth is anticipated in air travel capacity.
