EMERGING ISSUES OF TOURISM INDUSTRY IN INDIA

UNDER GLOBALISED ERA

Professor Nawab Ali Khan
&
Professor M. Mushtaque Ahmad

ABSTRACT

Tourism as one of the important foreign exchange earning industries has

manifested great potential of growth under liberalized Indian economy. To attract the
foreign tourists in India, liberal policies and reduction in taxes along with a
comprehensive package for attracting tourist and foreign investment are the need of
the hour. There is also a need to increase the government’s role in promoting India as
a brand. Just like exports and other sectors, tourism will grow only if the India brand
is established in the global market. Hence, we must have an open mind on alliances
with other countries, which might help in adopting better promotion strategies,
marketing, services and packaging. Only overall growth can help in improving
revenue generation, which needs to grow in line with the additional capacity being set
up by the hospitality industry.

Key Words: Tourism Policy, infrastructure, destinations, terrorism, sustainable

tourism development, Global Tourism Boom, Economy

Introduction

Tourism has become the world's largest industry, generating wealth and
employment, opening the minds of both visitors and the visited to different ways of
life. Worldwide, the industry currently employs more than 200 million people.
Tourism, as an instrument of economic development, will steadily assume an even
greater importance in the future. There are grounds for optimism about what
sustainable tourism development can mean for poor nations in the 21st century. But
coordinated and consistent efforts, to achieve it, in the face of soaring tourism
demand, are rare. Sustainability carries the idea of self-regulating societies in which
economic and social changes are broadly accommodated. The Second Global Summit
of Institute for Peace Through Tourism held in Geneva, Switzerland, acknowledged

Dr. Nawab Ali Khan is Professor in the Department of Commerce, Aligarh Muslim
University, Aligarh. He can be reached at nawabalikhan@indiatimes.com and Prof.
M. Mushtaque Ahmed is Principal, College of Management Studies, GLAITM,
Mathura. Earlier he was Dean, Faculty of Commerce and Chairman, Department of
Commerce, Aligarh Muslim University, Aligarh.
 2

that tourism has an increasing pressure on local society, economy and environment.
The summit tackled the pressing issues that are pertinent to the current situation in the
travel and tourism industry. Among these issues, poverty reduction was one of the
major issues. Tourism can help poor countries develop by increasing employment
opportunities.

India has a lot of potential in the field of tourism and travel as compared to
some of the countries like Malaysia, Thailand, Singapore, Hong Kong and Mauritius
which earn more foreign exchange than what we do. It is a matter of concern,
however, that a country which supports more than sixteen per cent of the world
population had just one per cent share of the global tourist arrival. The major
problems faced by the tourists are the terrorist activities, war-like situations and
safety and security. Under the circumstances tourists prefer short-haul destinations
with established reputation for safety and their decisions are hardly influenced by
financial considerations, though, in normal situations, cost considerations do affect
the decision of inbound tourists to a large extent. At the international level 9/11
September attack on the World Trade Centre, Afghanistan and Iraq Wars, continued
war-like situations in Palestine and Jammu & Kashmir and also SARS have
adversely affected the movement of foreign tourists.

Present Position of Tourism Industry in India

It may be mentioned here that the Government of India had no Tourism

Policy for more than forty years since the initiation of planning in the country in
1951. Consequently, no efforts were made to lay down any sort of infrastructure for
the promotion and development of tourism industry in the country. As a matter of
fact, the country, after independence, had to pay serious attention towards increasing
food production and laying down infrastructure for industrial development. On both
the fronts, the country made tremendous progress and became leader of the
developing nations. In order to achieve targets of faster economic growth, a number
of Public Sector Enterprises were set up including India Tourism Development
Corporation. However, no worthwhile progress was made in developing tourism in
accordance with tourism potential of the country. It was only in 1992 that a tourism
policy was laid down by the Government of India.
 3

As far as total revenue to the Government of India is concerned, tourism is

the third largest source of foreign exchange earnings to the country after garments,
gems and jewelry. India has tremendous potential to earn more foreign exchange
because it has a huge and diverse potential for tourism ranging from pilgrimage
tourism, beach tourism, eco-tourism, spiritual and health tourism to leisure and
adventure tourism. The amazing diversity offers tourists every thing they want to
enjoy from a holiday but still we could not capitalize on the huge variety of
amusements offered by our country. In order to attract the influx of tourists in the
years to come, the Government of India has allocated US $590 million for the
tourism sector for the period of 2002-07. While the global tourism market has shown
negative growth, tourist arrivals in India have improved a little in the recent past.
This is a positive indication but much more can be done to promote inbound tourism
in India.

In brief in India, the tourists feel insecure and irritated on account of

unwanted paper work, time consuming compliance of various rules and regulations,
customs and immigration formalities, red-tapism, currency convertibility, beggars,
tipping, bargaining, environmental pollution, transport problem, high rates and taxes
etc. Beggars are such a nuisance that they are visible almost at all tourist spots,
hotels, shopping centers, markets, monuments, places of worship, railway stations
and bus stands. They constantly follow the visitors and there have been occasions
that the tourists are so much irritated that they cut short their visits, shopping and
spending. The tourists, thus, ignore India to avoid hassles and prefer other
destinations where the spectre of poverty and its manifestation like begging do not
spoil their holiday spirit. Thus, India's third largest foreign exchange earning industry
is beset with a large number of problems. These problems have been examined in
greater details in the pages that follow.

Recent Challenges of Tourism Industry in India

During the last few years tourists have witnessed good amount of violence
and killing almost in every country including India. Kashmir, historically known as
'Heaven on the Earth', appears to be deserted on account of terrorism and violence. A
large number of tourists, who used to visit and stay for a longer period in the
Kashmir valley, do not tour the State of Jammu & Kashmir for fear of violence and
 4

aggression. The business travelers also schedule their business trips only when it is
absolutely essential. In fact, terrorism and violence have become the first and the
foremost problem for tourists everywhere and India is no exception. The problem has
assumed such alarming proportions that the world community must find its lasting
solution. The injustices done to the people in various parts of the world have resulted
in great damage to tourism industry all over the world Tourists, especially of the
developed countries; have been avoiding such destinations where there is any chance
of violent activities against them. The problem has become so acute that the
Governments in UK and the USA, in the recent past, had to issue travel advisories to
their tourists. Though these travel advisories were, later on, withdrawn but the
damage had already been done. India is not a preferred destination now for most of
the Western tourists who spend, from our standards, a lot of money on tourism.

Tourists are also irritated on account of unwanted paper work, time wasting
compliance of rules and regulations and red-tapism in India. In addition to customs
and immigration formalities, language barriers are also the major problems faced by
the foreign visitors. The difficulties of entry and exit too spoil half of the holiday
charm. Again, our poor infrastructure, shortage of packaged tours, lack of
connectivity between places, lack of transportation, our failure to create mass
awareness throughout the world, polluted environment, discriminating economic and
social behaviour, inadequate and inexperienced staff, uneasy current convertibility
and lack of multi-linguistic guides come in their way of pleasant tour and make the
foreign tourists reluctant to come to India.

Strategies to Promote Tourism Industry in India:

India has strong signs of becoming one of the emerging giants in world
tourism because its economy, particularly in the areas of Information Technology and
Telecommunications, is undergoing enormous growth. India’s outbound travel
volume, which is twice as large as its inbound number, would increase significantly
in the near future if tourism becomes State driven. The most imperative factors for
successful tourism development include product enhancement, marketing, regulations
and human resource development. The role of the State is pivotal because a large
number of tourism resources like foreshore lands on the coast, heritage monuments,
forest and wild life, inland water bodies and major infrastructure like airports, roads,
 5

ports vest with it. Therefore, in order to promote tourism industry in India in the wake
of aforementioned challenges, the following strategies will go a long way to welcome
visitors to explore, see and take back home the cherished, true and lively memory of
exploring India from North to South and West to East.

First of all, to succeed and counter the challenges, there is need to develop the
required human resources in various segments of tourism industry. It has become
imperative as a consequence of the rapid growth in tourism, fast changing technology
and dynamic changes in the international tourism market. At present, major problems
and constraints, involving human resource development in the tourism sector are
shortage of qualified manpower, shortage of tourism training infrastructure and
qualified trainers, working conditions in the tourism sector and lack of strategies and
policies for human resource development in the tourism sector.

Secondly, it is essential that Government of India take special measures to

overcome impediments to tourism and travel. The most common set of impediments
consist of managing and processing of visas, travel taxes, border formalities and
customs and health regulations. The Government needs to consider as to how to
adjust such controls and requirements in such a way that tourism development is
facilitated while important national interests are protected.

Thirdly, to attract foreign investment in a highly competitive global market, it

is imperative for government to improve the investment climate. Regulations and
procedures for registration and approval of foreign investments need to be simplified
and made more transparent. Approval criteria should be clear and should be linked to
the country's tourism development goals and objectives. These goals and objectives
need to be well defined and should specify the role of foreign private investment.

Fourthly, more than any other type of development, tourism requires an

unspoilt environment to operate. This is particularly true in the Asian and Pacific
region, where the region's major marketing strategy extols the beauty and tranquility
of its coastal areas. It is essential that tourism in the region is developed and managed
in such a way as to protect natural assets. The extent to which tourism development is
planned and controlled in an orderly and coordinated manner, it will affect the long-
term quality of the tourism product and subsequently the success of the industry.
 6

While tourism can be a catalyst for development, it is of the utmost importance that
government plans and develops tourism carefully so that the benefits can be
optimized without creating social and environmental problems.

Fifthly, despite the increasingly important role of tourism in the socio-

economic development of country, there is a lack of reliable and systematic research
on its economic impact. When the link between national economic policy-making and
tourism development is weak, integrated planning becomes difficult and tourism is
consequently given unduly low priority.

Sixthly, in order to pursue sustainable tourism development, Government of

India needs to strengthen capabilities in formulating appropriate policies and
strategies for the promotion and development of tourism in the country. The
advantages of a regional or sub regional approach has been acknowledged by many
countries. The challenges of tourism industry can be tackled more effectively through
closer cooperation among countries. Increased competition among destination areas
has also contributed to the recognition of the potential benefits of inter-country
cooperation. Regional cooperation can help conserve scarce resources, facilitate
cultural and economic understanding and increase the frequency of international
contacts and exchanges. Tourism, in particular, is recognized as having a positive
impact in tying together regional issues because of its international implications.

Seventhly, as regards railways, a device should be planned so that the tourists

may get quick and instant reservation. Unless our rail transport is improved- the
speed, cleanliness, catering and other services – it will not be possible to attract
visitors to this mode of transport in spite of our low fares and attractive bargain
offers. Middle class visitors who cannot afford to travel by air-conditioned or first
class coaches, too, must be offered concessions. However, unless some quota of seats
is reserved for foreign visitors, the concession will be of no avail. Besides, at some
future date it might be possible to extend railways to the neighboring countries of
south-east Asia in order to attract tourist traffic from there. Again, overcharging by
taxi drivers is a universal occurrence. But this should be no justification for its
prevalence in India. Mild penalties and punishments, such as suspension of licenses,
have hitherto failed to evoke the desired results till date. Motor transport authorities
 7

should give exemplary punishment to erring drivers in order to eradicate this

nuisance.

In addition, quality of foodstuff served is an incentive to reckon in attracting

the tourists inflow. What is suggested is that, in addition to the continental dishes,
proper attention should equally be paid to the local food and every effort should be
made to prepare and serve popular Indian dishes so that the foreigners may be
familiar with Indian culture and traditions through the foodstuff. We have not
developed an effective organization for the competent marketing of our indigenous
products. As a matter of fact, very few visitors are aware of the wide range of goods
available in the country. It is evident from the complaints of visitors about their being
over-charged and cheated. Practice of bargaining due to lack of fixed price shops is
very common in every part of the country. There is an urgent need to check and stop
it forthwith. It is also observed that the visitors from countries with whom India is not
having soft and cordial relations and vice-versa do experience difficulty and wastage
of time in obtaining passport and visa. It should not be allowed to continue at least in
the area of tourism in order to attract tourists even from those countries with whom
our relations are not cordial.

It has already been mentioned in the beginning that no sound Tourism Policy
existed in India till 1992. The central government should formulate a comprehensive
tourism policy and put it before the Parliament for approval and implementation. The
state governments can also do so on the similar lines. Such policy measures will have
a long term bearing on the tourism development in India.

Finally, lack of awareness in the field of tourism can also be treated as a major
challenge. This awareness is, at present, limited to few enlightened people in our
society. It must be extended into a felt need of the masses. Only then it will become
the national goal. The Indian publicity is unimaginative and weak. So far, it covers
only the tourists and the potential tourists with the purpose of luring them to visit
various places in India. Such publicity has no persuasive pressure on the people of
these places to welcome the tourists. For the common citizens, a visiting tourist group
is no concern at all. They are strangers for the local people. These guests are either
avoided or exploited.
 8

Thus far it has been observed that tourism industry serves as a means of
economic development. Eminent scholars and economists have been paying serious
attention to economic development throughout. According to Meier and Baldwin
maintaining development is a problem for rich countries but accelerating development
is even more pressing matter for the poor countries. It has been rightly remarked by
the same authors that ‘a study of the poverty of nations has even-more urgency than a
study of the wealth of nations. In more advanced phases of capitalistic development,
economists have been attempting to spell out the precise conditions necessary for
maintaining steady growth and avoidance of chronic conditions of general over
production or under production resulting in a clear-cut divide between the ‘haves’ and
the ‘have-nots’. Instead of bringing about a more equitable and just economic order,
the developed West has been trying to pacify the poor by a number of social security
means, which it can very well afford.

For quite sometime traditional definition of economic development implied

sustained annual increase in GNP or GDP at rates varying from 5 to 8 per cent per
annum or more together with such alterations in the structure of production and
employment. With regards to the composition of GDP, the percentage shares of
various sectors have largely changed. The percentage share of the agriculture in the
total GDP has declined, on the contrary the percentage share of services in the GDP is
rising faster. Data reveals that the percentage share of services in the total GDP
increased from 41 percent in 1990-91 to 54 percent in the year 2005-06. On the other
hand percentage share of agriculture in the GDP declined to 20 percent in 2005-06
from 32 percent in the year 1990-91(economywatch.com). These policy measures
were the ones, which induced industrialization at the expense of agricultural
development. Objectives of poverty elimination, reduction in economic inequalities
and employment generation were mentioned in passing reference only and, in most
cases, it was assumed that rapid gains in overall growth in GNP or per capita national
(domestic) product would trickle down to the people in one form or the other. But
throughout the mid-twentieth century it is felt that 40 per cent of the population had
not been benefited, rather it added more miseries to the people. Keeping in view the
poor performance of the agriculture in India’s Economy, the coming budget 2008-09
is expected to come with more investments on agriculture. Though the services sector
 9

in India has huge contribution to the country’s economy, still it has failed to some
extent in attracting more investments to the sector. More over the coming budget
2008-09 is expected to draw more attention on consumption led growth, which is
needed for strengthening and sustaining the economic growth of the country.

It is because of the aforesaid reasons that after 1960 ‘economic development’

is no longer considered identical with ‘economic growth’ in economic literature. It is
considered to mean growth plus progressive changes in certain crucial variables,
which determine the well being of the people. It was against this back-ground that
during the 1970’s the economists tried to redefine the concept of economic
development especially in terms of reduction of poverty, inequality and ‘redistribution
with growth’ became the popular slogan.

Now economic development is generally defined to include improvements in

material welfare, especially for persons with the lowest income, the eradication of
mass poverty with its correlates of illiteracy, disease and early death, changes in the
composition of inputs and outputs that generally include shifts in underlying structure
of production away from agricultural towards industrial activities, the organization of
the economy in such a way that productive employment is general among the working
age population rather than the situation of a privileged minority, and the
correspondingly greater participation of broadly based groups in making decisions
about the directions, economic and otherwise, in which they should move to improve
their welfare(Charles P. Kindle Berger).

Dudley Seers is also of the same opinion about the meaning of economic
development. He puts three basic questions in this connection. What has been
happening to poverty? What has been happening to unemployment? What has been
happening to inequality? If all three of these have declined from high levels, then
beyond doubt this has been a period of development for the country concerned. If one
or two of these central problems have been growing worse, especially if all three
have, it would be strange to call the result ‘development’ even if per capita income
doubled.

The late ‘Eighties’ and beginning of the ‘Nineties’ of the last century
witnessed revolutionary changes of far reaching consequences, which nobody could
 10

have dreamt of. Dismemberment of the erstwhile Soviet Union, demolition of the
Berlin Wall and re-unification of Germany changed the whole economic philosophy
in the world. Closed economies gave way to the open economies. We also introduced
economic reforms through liberalization, privatization and globalization without
taking into confidence at least 300 million urban and rural poor as to whether they
support such reforms or not. Even now, the opportunity is not lost and we should
think twice before going in for wholesale opening up of the rest of our economy to
international competition. While the touchstone of competition can create heaven, it
can more easily lead to hell also. The WTO largely ensures unequal and unsustainable
competition between the developed and the developing nations.

There are other serious implications of the WTO agreements. While the
developed countries can strengthen their control over their own agriculture by keeping
their food security intact, the developing countries like India are called upon to
ultimately dismantle their Public Distribution System (PDS). How to call quotations,
how to advertise, how to charge price, how to ensure transparency and for whom are
some of the basic questions for which the Third World countries have to find answers.
In a nutshell, the most important question is whether to retain or surrender our
sovereignty. On the other hand, when it comes to their own commitments, the
industrialized nations of the North conveniently ignore the issues. The US itself has
turned back on Kyoto Protocol on global warming, much to the dismay of the rest of
the world, particularly the European Union and Japan.

The New Economy

The ‘new economy’ consisting of Information Technology (IT), TELCOM

and Electronic Entertainment (with vast possibilities of digital convergence) sectors,
where the products usually do not tend to be physical and tangible, has made
tremendous progress in recent years as compared to the ‘old’ or ‘brick-and-mortar’
economy. In IT, India has built up valuable brand equity in the global markets. In IT-
enabled services (ITES), India has emerged as the most preferred destination for
business process outsourcing (BPO), a key driver of growth for the software industry
and the services sector. India's most prized resource in today's knowledge economy is
its readily available technical work force. India has the second largest English-
speaking scientific professionals in the world, second only to the U.S. According the
 11

data from ministry of communication and information technology, the ITES-BPO

industry has grown by about 54 per cent with export earnings of US$ 3.6 billion
during 2003-04.

India’s Economic development has brought tremendous success for the

country with a better global image. Economy Statistics on India’s Economy has
shown that the country's economy has experienced a robust growth in the second
quarter of the year 2006-07. The Gross Domestic Product in the country increased at
an impressive rate of 9.2 percent per annum. The GDP Growth was mainly led by the
fast rising industrial production as well as the growth in the services sector. The Real
growth rate of Gross Domestic Product of India over various quarters for the year
2006-07 is as follows: For the second quarter of the year 2006-07, the agriculture and
allied activities grew at a rate of 1.7 Percent, industries grew by 10.5 Percent, and the
services sector grew by 10.7 Percent. The infrastructure industry in the market
economy like India grew at a rate of 7.8 percent during the period of April-Nov 2006.
The services sector was led by the sub-sectors such as hotels, restaurants, transport,
storage and communications. That is, the new economy was moving over ten times
faster than the old economy. It is also capable of effecting major reductions in
manpower requirements, so that much smaller labour force can be given substantially
higher wages and perquisites. But there are powerful social constraints in India’s
macro-economic context with staggering under-employment in the agricultural sector
whose contribution to GDP has steeply fallen from 58 percent to 25 percent over the
last half century. It is beyond imagination that the rest of the economy can grow as
fast as to absorb the retrenched employees of the various firms as well as new entrants
to the existing labour force.

The important point to be noted here is that whether the fast progress of this
leading IT sector(s) or the developed tourism industry will be able to pull up the rest
of the economy as propounded by W.W. Rostow in his ‘Stages of Economic Growth’.
His thesis seemed to work fairly well in an earlier world where different countries
concentrated on varying packets of specialization. In the contemporary situation,
almost all the countries are over-focusing on, virtually, the same field. To become an
IT or TELCOM professional is the wish of every youth today but such lucky persons
are no more than one million in India with a population of more than one thousand
 12

millions giving a probability of just one in a thousand. The mushroom growth of

dot.com companies, started in the 1990s, has already seen, within a decade, their
demise not only in the USA but the world as a whole.

The aforementioned situation brings us to the conclusion that, in the long run,
sustainability of ‘brick-and-mortar economy’ is the precondition for the continued
prosperity of IT professionals. Whom will they advise if their clients stood denuded of
their paying capacity or disappeared from the seen altogether? In the wake of market-
led globalization, particularly since 1991, the world has already witnessed a number
of financial scams, terrorist attacks and other forms of criminalisation. The basic
question is: What about the numberless leftovers left behind in the competition
struggle? Who will take care of them, in this age of privatization, if not the
Governments? Or, we leave them to take the law into their own hands?

The WTO-led trade liberalization process, speeded by the information

technology revolution, has widened income inequalities within and between nations.
The reforms have not reduced unemployment as widely expected at the time of their
introduction. In the organized private and foreign investment-based industrial sector
employment has remained constant at 7.5 million for the last six to seven years. The
massive ‘opening up’ of the economy to direct imports and local screwdriver
technology-based production by the MNCs have resulted in tens of thousands of
small-scale units dying or becoming sick leading to job destruction, rather than job
creation, except for the IT sector.

Concluding Remarks

Keeping in view the diverse emerging trends evident in the Global Tourism
Boom, which regrettably remains elusive for India despite its high quality product, it
is through the aforementioned strategies that the Indian tourism can be made stable by
making a special strategic framework of promotional policy in and outside India. All
it requires is that India should promote adventure tourism, concentrate on domestic
tourism, rather than inbound tourism, and launch a publicity campaign for tourism
promotion. Besides, more and more travel writers should be invited and Indian
operators should be encouraged to participate in promotion activities abroad also.
Conventions of travel and trade organizations like PATA and ASTA can give India
 13

an additional international exposure. India should also create tourist friendly

environment and should come out with a comprehensive civil aviation policy, which
encourages private participation by speed and time bound clearance of private
proposals for domestic airlines, and infrastructure projects. Investment should be
made to develop adequate ground handling and navigation facilities to combat
increase in the air traffic, particularly on the trunk routes. Proper identification of
tourist segments and focused marketing efforts, with the help of professionals, should
be undertaken. In this way, India can improve its market share in the world tourism
by concentrating on the above mentioned important promotional strategies, thus
reducing the effect of 9th September terrorism incident from the industry and history,
which has really affected the Indian tourism industry worldwide.

In fine, the beaches should be promoted as ‘Indian Beaches’ rather than Goa
Beach and Kerala Beach separately. Liberal policies and reduction in taxes along with
a comprehensive package for attracting tourist and foreign investment are the need of
the hour. There is also a need to increase the government’s role in promoting India as
a brand. Just like exports and other sectors, tourism will grow only if the India brand
is established in the global market. Hence, we must have an open mind on alliances
with other countries, which might help in adopting better promotion strategies,
marketing, services and packaging. Only overall growth can help in improving
revenue generation, which needs to grow in line with the additional capacity being set
up by the hospitality industry. The government should not slowly withdraw from
every field and leave the poor masses to the mercy of private sector alone. The
governments in the developed world are directly and indirectly helping their masses in
a large measure by providing them various kinds of subsidies worth billions of dollars
every year and India must follow suit.

Selected References:

1. K. V. Ravisankar, “Tourism: A Social Uplifter”, Tourism India, Vol.,11,

March, 2003.
 14

2. Fauzia Farha, “The Impact of September 11 Attack on Tourism Industry in

India”, MTA Project Report, submitted to the Department of Commerce,
A.M.U. Aligarh, 2003.

3. G. Ganapathy Subramaniam, Tourism Industry Aims Global Tie- ups to boost

Brand India”, Times News Network, Chennai, December, 8, 2003.

4. Meier and Baldwin, “Economic Development: Theory and Policy.

5. Charles P. Kindleberger and Bruce Herrick, Economic Development.

6. Dudley Seers, “The Meaning of Development”, 11th World Conference of the

Society of International Development.

7. www.economywatch.com