Wednesday, October 10, 2012

Outbound Tourism Policy Need of the Hour in India

It is more or less a quarterly gimmick by reporters in the Indian media who cover tourism. Since early 2011, they have been issuing reports (perhaps on ‘dry news days’) that the list of countries whose citizens will be provided Tourist Visa-on-Arrival (VOA) at international airports is being expanded. Do a Google search for ‘India visa on arrival’ and you will know what I mean. Under the policy implemented since January 2010, India currently issues VOA to 11 countries including Japan, Indonesia, the Philippines, Cambodia, Laos, Vietnam, Singapore, Myanmar, Finland, Luxembourg and New Zealand. Citizens of these countries can get a single entry visa on arrival with a maximum validity of 30 days, at Delhi, Mumbai, Chennai and Kolkata Airports. This list is sought to be expanded to include 13 countries largely from Europe, south-east Asia, even as more entry points will be included. The expansion of the list will no doubt give a major boost to the tourism industry in India, as more visitors land up on its shores. Tourism is not only a growth engine but also a big employment generator. Worldwide, the industry generates eight percent of jobs, and it is estimated that each job in the tourism industry creates two additional jobs in other sectors. As noted in the Declaration adopted by Tourism Ministers from G20 economies at the recent summit in Merida, Mexico, on May 16th, visa facilitation is central to stimulating economic growth and job creation through tourism. In particular, G20 economies could boost their international tourist numbers by an additional 122 million, generate an extra $ 206 billion in tourism exports and create over five million additional jobs by 2015 if they improve their visa processes. The Ministry of Tourism statistics show that foreign tourist arrivals in India during 2011 were 6.29 million, growing from 5.78 million during 2010. Last year, India received 12,761 tourists under the VOA scheme, the largest numbers coming from New Zealand and Japan with 2,762 and 2,344, respectively. These are still relatively low figures, if you compare the number of tourists who visited China last year (135 million). Though, it is still a good start, what is worrying is the fact that MEA is not looking at mutual reciprocity with countries in implementing the VOA policy. Rightly, the focus is to attract international tourist traffic and turn India into a major tourist destination, but regrettably, the plight of the outbound tourist is completely ignored. Today, Indian travelers and the estimated 25 million strong overseas Indian community require a processed visa from their country of residence, to visit all the major G20 economies (except Indonesia which allows for VOA). Information provided by the International Air Transport Association (IATA) shows that some 59 countries and territories provide visa-free or VOA access to holders of Indian passports.These include countries such as Burundi, Bolivia, Cape Verde, Central African Republic, Comoros, Djibouti, El Salvador, Ethiopia, Gambia, Guinea-Bissau, Guyana, Mozambique, Nauru, Sao Tome & Principe, Samoa, St Lucia, Timor Leste, Togo, Tuvalu and Kosovo, which hold little to no interest for the desi leisure traveler. It is only countries on the list like Thailand, Egypt, Cambodia, Indonesia, Hong Kong, Tanzania, Kenya, Madagascar, Maldives, Mauritius and Seychelles that may pique the interest of the Indian tourist. For that matter, the top tourist destinations for outbound Indian travelers last year were Singapore, USA, Malaysia, Thailand, China, Dubai, Hong Kong, UK, Italy, Australia, Switzerland and Canada. Since India’s tourism policy has been focusing on inbound travelers, the policy approach on outbound tourism has been relatively insufficient. This despite the fact that Indian outbound tourists topped 12.5 million, double the number of inbound tourists. The UN World Tourism Organisation predicts that the country will account for 50 million outbound tourists by 2020, while the ‘Kuoni Travel Report India 2007’ predicts that total outbound spending will cross the $28 billion mark in 2020. Pointers should be taken from the new study by London-based Centre for Economics and Business Research (CEBR), unveiled on May 10th. It highlights that outbound travel directly contributes over £22bn to the economy, representing 1.6% of UK GDP. With the inclusion of contributions made by industries supplying the sector, the total economic impact rises to over £54bn, or 3.8% of UK GDP! In addition to its economic contribution, the outbound sector makes a significant contribution to jobs. When jobs that are reliant on supplying the industry are taken into account, this reaches 5.2% of total UK employment. The report also reveals that the total tax take from the outbound sector is £6bn per year, with £1.2bn raised from indirect taxes such as Air Passenger Duty (APD). This is a significant contribution. Although there are no similar studies for India, it goes without saying that the Indian holidaymakers also spend at the local travel agent and shop for clothes, accessories, cameras, toiletries and other essentials before they embark on a trip. This consumer spending has a direct impact on the domestic economy, not to mention employment generation and taxes. Our policymakers assume that by going abroad on holiday, money is being taken out of the Indian economy. On the contrary, outbound tourists make a huge contribution to the Indian economy, both directly and indirectly. The government must recognize and support outbound travel in its current and future policies and plan strategies to deliver growth to the wider economy. The first step should be to simplify overseas travel for Indian tourists. Additionally, it should work to generate and promote demand for overseas travel in cooperation with the relevant ministries, state governments, travel agencies, airlines and overseas national tourism organizations. This segment needs to be tapped to benefit the Indian economy, and the policymakers ought not to ignore it.