Indian Tourism Industry

Focus on South India

June 2015

Industry overview
Indian Tourism Industry
The tourism and hospitality industry is one of the largest segments under the services sector of the Indian
economy. Tourism in India is a key growth driver and a significant source of foreign exchange earnings.
The direct contribution of Travel & Tourism to GDP is expected to grow by 6.4% pa to INR 4,346.4 Bn
(2.1% of GDP) by 2024.
The direct contribution of Travel & Tourism to GDP in 2013 was INR 2,178.1Bn (2.0% of GDP). This is
forecast to rise by 7.5% to INR2,340.6 Bn in 2014.This primarily reflects the economic activity
generated by industries such as hotels, travel agents, airlines and other passenger transportation services
(excluding commuter services).
Travel & Tourism direct contribution to GDP, INR Bn

Source: World Travel & Tourism Council

Drivers behind increase in tourist traffic

Domestic Tourist Traffic
Rapidly increasing purchasing power of the middle class
Better road connectivity
Evolving lifestyle

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 International Tourist Traffic

Value for money/economical holiday destination
Business cum pleasure destination
Development of Kerala and Rajasthan as the most popular tourist destinations in India with their
distinctive brand image
Reform in the aviation sector such as Open skies Policy has led to better connectivity with many
countries with India.
Success of Incredible India campaign and other tourism promotion measures
Tourism in South India
Compared to the national average growth rate of 9.5%, the total number of tourist visits in the southern
states of India witnessed a growth rate of 9.2 % during the period 2012-2013. While the total number of
tourist visits in India amounted to 1165.23 Mn in 2013 , those in southern states amounted to 499 Mn in
the same year. The domestic and international tourist visits in southern states witnessed growth rates of
10.4 % and 3.2% respectively during 2008-2013 amounting to 494.34 Mn domestic tourists and 5.5 Mn
international tourists in 2013.
Tourist visits in southern India
300
248.2

250
200
150

153.4

152.3

140.9

100

84.7

98.6

50
10.1

11.7

0
Andhra Pradesh

Tamilnadu
2011

Karnataka

Kerala

2013

Source: Ministry of Tourism

Tamilnadu stood second in the country in term foreign tourist visits. The Tamilnadu Tourism
Development Corporation laid its emphasis Medical tourism, Leisure Tours, Beach Tours, Rural Tourism
and Heritage Tourism among others. The historical and archaeological sites in the southern states are a
huge tourist attraction in India and abroad.

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Market share of Tourism

In 2013, the southern states accounted for 44% of the

13%

total tourist visits in India. There has been a

significant growth of tourism in the southern states
primarily in Tamilnadu. The high growth can be
attributed to the initiatives taken by the tourism
department of the state governments. The Tamilnadu

21%
56%

government has earmarked Rs. 10,300 crores for

tourism development.
Medical Tourism is another growing sector in the

9%
1%

tourism industry and it is expected to grow at 30%

annually, making it a $2 Bn industry. Chennai has

Andhra Pradesh

Tamilnadu

Source: Ministry of Tourism

Karnataka

Kerala

Others

been termed as India's Health Capital.

Challenges

Lack of proper infrastructure - Infrastructure needs for the travel and tourism industry range
from physical infrastructure such as ports of entry to modes of transport to urban infrastructure
such as access roads, electricity, water supply, sewerage and telecommunication. The sectors
related to the travel and tourism industry include airlines, surface transport, accommodation
(hotels), and infrastructure and facilitation systems, among others.

Access and connectivity - To harness Indias tourism potential, several efforts are being taken
for opening new destinations and exploring niche segments. However, infrastructure facilities
such as air, rail, road connectivity, and hospitality services at these destinations and the
connecting cities are inadequate. This remains a major hurdle for development of tourism.

Human resource - Availability of skilled manpower is a major challenge faced by the travel and
tourism industry, one of the largest employment generators in the country. To sustain growth in
the travel and tourism industry, trained manpower/ workforce is required at every level
managerial, supervisory, skilled or semi-skilled.

Marketing and promotion - Marketing and promotion of India as a major tourist destination is
critical for the industry to achieve its potential. Lack of adequate budgetary support for
promotion and marketing, compared with competing tourist destinations, is a major reason for
India lagging behind as a tourist destination. Marketing under the Incredible India campaign
helped place India as a good tourist destination on the global tourism map. Indian tourism
products are promoted primarily by the Ministry of Tourism with the involvement of state
governments through the State Tourism Development Corporations.

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