tourism in north india

CII conclave

Tourism in north India

kpmg.com/in

Tourism and hospitality, like any other dynamic sector has metamorphosed over time. Growing competition has compelled stakeholders to bring about innovation in this sector at regular intervals. Concepts like rural, adventure retail weekend and medical tourism have developed to attract the new generation of tourists who are upwardly mobile and have high disposable income.

India, a tourism product which is unparalleled in its beauty, uniqueness, rich culture and history has been aggressively pursuing the promotion of tourism both internationally as well as in the domestic market.

The Indian tourism industry is thriving due to an increase in foreign tourist arrivals and greater number of Indians travelling to domestic destinations than before. India’s demographic dividend of mostly comprising a younger population compared to developed countries is leading to greater expenditure on leisure services. The travel and tourism sector’s contribution to capital investment is projected to grow at 6.5 per cent per annum during 2013-2023, above the global average of five per cent.

It has hence become utterly important to prepare oneself to meet these challenges and to maintain the competitive edge for sustainable growth in this sector. The creative forces of the market are essential in a demand-driven sector. Consumer expectations have to guide the design, development and commercialisation of tourism products. This means that tourism policies must be customer and market-oriented. Innovat mechanisms are necessary for the continuous rejuvenation of the existing offers and for endogenous growth. In the recent years, the Indian tourism and hospitality sector has witnessed the entry of several foreign and domestic private players and large private investments have flowed into the sector to add fresh capacities .

Set against this backdrop, CII is organising the second edition of the ‘CII Tourism Fest’ to bring critical stakeholders like policy makers, officials of Ministry of Tourism, State Governments, International Tourism Boards, hoteliers, hospitals, tour operators and travel agents on one platform.

I hope that the deliberations not only reflect the true voice of the industry, but also bring together all the stakeholders to kick off a new campaign to create and establish a roadmap for inclusive and seamless tourism.

Mr. Ankur Bhatia

Chairman, CII Tourism Fest 2014 and

Executive Director, Bird Group

CII Foreword

The travel and tourism industry has emerged as one of the largest and fastest growing economic sectors in India. Its contribution to the global Gross Domestic Product (GDP) and employment has increased significantly. As a result, travel and tourism has emerged as an important area of focus for the Indian government.

Bestowed with natural beauty and home to several archeological monuments, the north Indian region is a one of the top destinations in India. As a result, tourism is a major revenue generator for some of the north Indian states. This part of India has witnessed increase in tourist visits, boosted by government initiatives to promote tourism in their states. Trends such as medical and adventure tourism are driving tourism in the north Indian states.

However, the sector is facing challenges such as lack of good quality tourism infrastructure, global concerns regarding health and safety of tourists, increasing possibility of natural disasters and shortfall of adequately trained and skilled manpower. While several plans and programmes have already been devised for tackling these challenges, successful implementation would be critical to accelerate growth.

Concerted efforts by all stakeholders such as the central and state governments, private sector and the community at large can be pertinent for sustainable development and maintenance of the travel and tourism sector in north India.

Jaideep Ghosh

Partner

National Head - Transport, Logistics, Leisure & Sports sector

KPMG in India

KPMG in India Foreword

Table of contents

Indian tourism at a glance

State of tourism in north India

Challenges faced by the north Indian tourism market

Government policies and initiatives to boost tourism

Trends shaping north Indian tourism

The way forward

01

03

06

10

15

17

01 | CII conclave - Tourism in north India

Indian tourism at a glance

Tourism and travel is one of India’s largest service industries. The Indian tourism and hospitality market was valued at around USD150 billion in 2013 and is expected to reach ~USD419 billion by 2022.1 It is also one of the top 10 sectors that attract FDI – during April 2000 to April 2014, the sector attracted USD7,441 million in investments.2 As a result it is expected that the sector’s contribution to India’s GDP will grow at an annual rate of 7.8 per cent between 2013 and 2023.3

Growth of the sector is being largely driven by increase in inbound tourists from abroad. Better connectivity with the world, numerous destinations spread across the country and stable political and economic environments are some of the key reasons that are attracting foreign tourists. The government is also actively promoting India as a tourist destination and plans to improve travel infrastructure to facilitate this; for instance, the government is aiming for 500 operational airports by 2020 at an investment of USD30 billion.4

Inbound tourist visits to India (million)

Source: Indian Tourism Report, Q1 - 2015, Business Monitor International, November 2014

1. Ministry of External Affairs Website, http://www.mea.gov.in/, November 2014

2. Department of Industrial Planning and Promotion, November 2014

3. India Tourism and Hospitality Industry Update, FRTP Research, November 2014

4. India Tourism Report - Q1 2015, EMIS, November 2014

CII conclave - Tourism in north India | 02

In terms of states that are most popular with foreign tourists, Maharashtra tops the list with a share of 20.8 per cent, followed by Tamil Nadu with a 20 per cent share in 2013.5

The situation changes a little when analysing the destination of choice for domestic tourists, as can be seen in the graph below.5

As seen, southern India witnesses the maximum visits from both, foreign and domestic tourists, followed by north India. However, north India’s has increased during 2010-2014 while that of south India’s has decreased.

Travel within the country is also witnessing steady growth. A growing middle class, with growing disposable incomes, has emerged as the driver of tourism within the country. Along with this, improving standards of accommodation throughout the country has fuelled tourism amongst Indians (and foreign tourists).2

Share of Indian states in foreign tourist vists (2013, %)

Share of Indian states in domestic tourist vists (2013, %)

Domestic tourist visits within India (million)

Top 10 states for tourist visits - Classified by share of region

Source: India Tourism Statistics at a Glance, Ministry of Tourism, 2013

Source: India Tourism Statistics at a Glance, Ministry of Tourism, 2013Source: India Tourism Statistics at a Glance, Ministry of Tourism, 2013


5. India Tourism Statistics at a Glance, Ministry of Tourism (2013)

03 | CII conclave - Tourism in north India

State of tourism in north India

The northern part of the country is an important destination for tourist arrivals, for business and leisure both, there are some large commercial centres in the northern states and the mountainous regions offers scenic holiday destinations too.

Compared to the national average growth rate of 15.4 per cent, the total number of tourist visits in the northern states of India witnessed a growth rate of 11.5 per cent during 2010-2013.6 While the total number of tourist visits in India amounted to 1,165.2 million in 20133, those in the northern states amounted to 360.6 million in the same year.3 The domestic and international tourist visits in the northern states witnessed growth rates of 11.6 per cent and 5.9 per cent respectively during 2010-2013, reaching 353.8 million domestic tourists and 6.8 million international tourists in 2013.3

Domestic tourist arrivals in north Indian states (million)


6. India Tourism Statistics, Ministry of Tourism, 2010 and 2013

CII conclave - Tourism in north India | 04

The share of north Indian states in overall tourist visits has declined in the recent past. In 2010, north Indian states accounted for 34.3 per cent of all tourist visits, which declined to 31 per cent in 2013.7 The share of north Indian states is shown below.

Punjab clocked the highest CAGR between 2010 and 2013 in attracting domestic tourists, while Haryana topped foreign tourist arrivals with a CAGR of 29 per cent during the same period. Haryana and Delhi are largely commercial and business related destinations, Himachal Pradesh and Punjab emerge as destinations preferred for leisure activities. Uttarakhand witnessed a decline in both categories; 13 per cent annual decline in domestic tourist arrivals and 8.4 per cent in foreign tourist visits. This decline in Uttarakhand can be attributed to the floods in 2013 that severely affected tourism during that year.

The U.S. and the U.K. account for the maximum number of foreign tourist visits in the northern states of India. This is in line with the overall tourist visits to India. Apart from English speaking countries like the U.K., U.S., Australia and Canada, a fair share of foreign tourists arrive from non-English speaking countries such as Germany, Japan and the UAE.6

Foreign tourist arrivals in north Indian states (million)

Share of north Indian states in total tourist visits (2012)

Share of north Indian states in total tourist visits (2013)



Source: India Tourism Statistics at a Glance, Ministry of Tourism, 20137. Indian Tourist Visits, Ministry of Tourism, 2013

05 | CII Conclave - Tourism in north India

Popular destinations in north India

North India boasts of some of the most visited places in India. Bestowed with a rich historical heritage, the region is sprinkled with archeological sites and monuments. These attract tourists from various corners of the world and within the country.

As evident, monuments in north India are the most popular among domestic and foreign tourists. These accounted for about 30 per cent of domestic tourist visits in 2012 and 62 per cent of foreign tourist visits. This trend has been visible over the last few years.6

Overall, the Agra and Delhi circles (circles refer to a region around a city where tourist attractions are present) attract the most tourists in the country.

Top five monuments visited by domestic tourists in 2012 (million)

Top five monuments visited by foreign tourists in 2012 (million)

Source: India Tourism Statistics, Ministry of Tourism, 2012 Source: India Tourism Statistics, Ministry of Tourism, 2012

Challenges facing the north Indian tourism market

North India offers a host of opportunities for market participants and tourists alike. However, at the same time a lot needs to be done to tap these. Some of the key issues and challenges hindering tourism in the region are discussed below.

Crime and women’s safety8: The past few years have witnessed a steady rise in crime, especially against women. There have been several cases of serious crime against women, which have grabbed headlines around the world. Coincidentally, a significant proportion of these incidents have been reported in the northern part of India. Some of the reported incidents have also been targeted at foreign tourists (in particular, women), which has raised concerns around the safety of people visiting India.

As a result, foreign tourists visiting India have become cautious when planning trips to north India. There are reports of decline in tourist volumes to this part of the country. For backpackers and budget travelers for whom safety and security is high priority, this is especially important. For instance, after a particular incident in New Delhi in December 2012, 35 per cent fewer females visited India9 compared with the corresponding period the year before.

Also, as per the World Travel and Tourism Council India Initiative10, India’s image as a tourist friendly destination has also suffered from the negative publicity surrounding these incidents. As a consequence, some countries have also issued advisory notices to citizens visiting India.

To boost India’s image (and that of north India in particular) as a preferred tourism destination, immediate steps will have to be taken to ensure safety of tourists (especially women). Visits can increase only when tourists feel safe.

Natural disasters: Popular tourist destinations in northern India have experienced natural calamities in the recent years. In 2013, the pilgrimage circuit in Uttarakhand was washed away by flash floods that resulted in the death of thousands of visitors and damage to property worth millions of dollars. A similar disaster struck Kashmir this year, leading to numerous deaths and widespread destruction. Along with such sporadic incidents, fatalities are often reported in the annual Amarnath pilgrimage.

8. India tourist visits down 25per cent following fatal Delhi gang rape, The Guardian (March 2013); After Delhi Gang Rape, 35 Percent Fewer Females Visit India, International Business Times (March 2013); Violence against women affecting India’s image, tourism report says, Times of India (June 2014)

9. After Delhi Gang Rape, 35 Percent Fewer Females Visit India, International Business Times (March 2013)

10. Violence against women affecting India’s image, tourism report says, The Times of India, June 2014

CII Conclave - Tourism in north India | 06

Such disasters are playing a part in dissuading tourists from visiting the affected destinations. This is evident from the dip in tourist visits to regions that were affected by the Uttarakhand floods in 2013. According to studies, tourism in Uttarakhand in 2014-2015 is estimated to see a 70 per cent fall at US 11.5 million.11

A similar consequence awaits Kashmir and Srinagar, which were ravaged by floods in September 2014. There have been mass cancellations already for travel to the state with tourists opting for other destinations.12

In the face of such unavoidable incidents, it is imperative that an extensive re-development plan be quickly put into place to make the affected destinations fit for tourist visits at the earliest. At the same time, disaster management plans should be implemented at all vulnerable destinations.

Hotel room occupancy: Large cities in north India boast of hotel room inventory that is at par with cities in other parts of the country; cities such as Delhi, Gurgaon, Chandigarh and Agra have many thousands of hotel rooms. As a result, the average occupancy of hotel rooms lies below the national average: based on data from nine major north Indian cities; the average room occupancy was 58.9 per cent in 2013 as against the national average occupancy of 60.4 per cent. As against this, nine major cities in cities in south India had an average occupancy of 63.2 per cent in 2013.13

Average occupancy in select cities

Cities 2008-2009 2012-2013

North India

Agra 54.8% 60.3%

Chandigarh 79.6% 65.4%

Delhi - NCR* 64.8% 57.1%

Jaipur 61.4% 58.6%

Jodhpur 51.0% 46.3%

Lucknow 63.0% 65.0%

Shimla 52.7% 56.5%

Udaipur 51.6% 59.5%

Gurgaon Not Available 61.0%

South India

Bengaluru 56.5% 56.6%

Chennai 64.6% 69.8%

Coimbatore 72.1% 61.3%

Goa 61.7% 67.7%

Hyderabad 56.3% 55.7%

Kochi 67.4% 71.5%

Mysore 67.7% 65.7%

Thiruvananthapuram 57.9% 57.1%

Visakhapatnam 69.0% 63.3%

All India 63.1% 60.4%

11. Poor business: Uttarakhand tourism still reeling from flood tragedy (A year after), OneIndia article, 17 June 2013

12. Jammu and Kashmir floods: State’s tourism prospects take a beating, Economic Times article (September 2014)

13. Indian Hotel Industry Survey 2012-2013, HVS Research, 2013

Source: Indian Hotel Industry Survey 2012-2013, HVS Research, 2013*New Delhi - NCR data including Faridabad, Ghaziabad, Gurgaon and NOIDA, and excluding Gurgaon


At the same time, during peak season in tourist destinations such as Nainital, Shimla and Kashmir, occupancy levels are at almost 100 per cent, showing a mismatch in demand and supply throughout the year. While full occupancy annually during peak season strongly indicates the need for additional room capacity in major tourist destinations, the seasonal nature of the industry prevents the addition of room inventory.

Room inventory is slated to increase in the coming years.14 However, peak season supply demand mismatch is expected to remain.

As per a Ministry of Tourism study15 conducted in 2008 the average number of rooms required daily could touch 4.2 lakh in 2015 across 14 cities/destinations in north India

Average hotel room demand per day in 2015 in major cities

Locations Daily demand

Delhi 1,43,639

Jammu 42,346

Srinagar 14,726

Varanasi 5,356

Agra 7,352

Shimla 11,492

Lucknow 1021

Allahabad 1293

Manali 11,700

Dehradun 6,869

Nainital 2,944

Mathura 665

Haridwar 35,300

Amritsar 375

Ajmer 41,793

Jaipur 50,509

Udaipur 24,970

Jodhpur 14,077

Jaisalmer 8,154

Total 42,458114. Hotels in India - Trends and opportunities, HVS (2013)

15. Study to assess Hotel Rooms /Accommodation in 50 Major Tourist centres and Metro cities in India, Ministry of Tourism, 2008

Hotel room supply across major Cities (2012-2013 and 2017-2018)

Source: Hotels in India Trends and Opportunities, HVS Research, 2013

Source: Study to assess Hotel Rooms /Accommodation in 50 Major Tourist centres and Metro cities in India, Ministry of Tourism, 2008



To take advantage of this demand, several new projects are ongoing in the region and new hotel chains have also entered the fray; for example, InterContinental Hotels Group opened two new hotels in New Delhi in December 201316; Holiday Inn opened its first hotel in Amritsar at the end of 2013.17 Other tourism infrastructure: Tourism infrastructure which includes transportation, lodging, food joints, civic amenities, help lines, medical centres, etc., is vital for sustaining tourism in destinations that witness high visit volumes. As per the World Economic Forum’s T&T Competitiveness Report, 2013 for 140 world economies, India’s air transport infrastructure, ground transport infrastructure and tourism infrastructure have been ranked 39, 42 and 95, respectively, indicating considerable scope for improvement.18 Apart from a handful of destinations in north India, others lack good roads and waterways, wayside amenities, uninterrupted water and power supply, information centres, etc.

While tourism infrastructure has come a long way in India, there is ample room for further expansion throughout the country and in north India. To this effect, the government has allocated about USD2.7 billion to infrastructure development in the country under its twelth five-year plan.19

Apart from physical infrastructure, there is a need to develop soft infrastructure as well to support tourism growth. Soft infrastructure refers to training and education that will help enable the smooth functioning of the tourism sector in north India and other parts of the country. In recognition of this need, the government is also pursuing its skill development effort for training over 2.8 lakh people.20

Infrastructure development is not only necessary to enhance the holiday experience, but to also add new destinations on the map.

16. IHG website, November 2014

17. Hotel Chains Take The Pious Route In India, Travel Trends Today, July 2014

18. Travel and Tourism Competitiveness Report, World Economic Forum, 2013

19. 12th Five Year Plan, Government of India, November 2014

20. Infrastructure gets a leg up, Travel Industry Today article, February 2014

Government policies and initiatives to boost tourism

States in North India have adopted strategies in order to enhance the tourism potential. Various fiscal incentives and investor-friendly policies are being adopted by the state governments for development of state infrastructure.

21. Himachal Pradesh Tourism Policy 2005

22. Punjab Tourism Policy 2009


State Fiscal incentives Policy supportTourism/civic infrastructure

development plans

Himachal Pradesh21

• 10 year tax holiday for entertainment units

• Deferred payment of luxury tax by hotels and tourism units

• Special incentive package for satellite towns and cyber cities with investment of over USD21.5 million by NRIs and foreign investors

• Special priority to the tourism sector for grant of power connections

• Single window clearance

• Destination Himachal Funds for marketing activities

• Development Institution Funding of USD95 million from ADB

• Increase in helipads to 70, aerial ropeways at 12 identified places, wayside amenities, spas and resorts, ski slopes, tourist centres, multiplexes, parking, amusement parks, golf course, 4/5 Star Hotels, budget accommodation, etc., at priority areas

Punjab22

• Land allotment on easy terms for developing hotels on selective basis

• Provision of soft loans for new tourism projects and expansion of existing ones

• Collaboration with UNWTO for technical assistance

• Sikh Circuit Tourism Plan worth USD40.4 million


• PPP development of roads, expressways, hotel management institutes, hotels and convention centres, tourist complexes, sports complex, parking facilities, etc.



development plans

Haryana23

• USD16.2 million and above, or employment for more than 500; financial assistance at 50 per cent of tax paid for seven years (five years for investment up to USD0.5 million) as Interest Free Loan (IFL)

• Five year exemption from electricity duty

• Customised incentives of USD5 million/above on projects

• Facilitation of land auction and institutional finance


• Task force headed by the Tourism Minister for finalisation of tourism proposals

• Declaration of Special Controlled Areas from Tourism point of view

• Development of Gurgaon as convention, exhibition hub and golf city along with adventure sites, theme parks, camping sites in Sohna and Damdama, Kurukshetra as a pilgrim destination & Morni, Kalesar and Sultanpur as eco tourism sites

• Planned upgradation of existing resorts, setting up theme parks and multiplexes, Tourist Reception Centres

Uttarakhand24

• 100 per cent entertainment tax exemption for three years; 30 per cent for further five years

• 100 per cent exemption for new amusement parks and ropeways for five years

• Capital investment subsidy in new projects at a ceiling of USD0.05 million

• Five year Rebate/ Deferred payment of luxury tax for new units

• 20 per cent assistance for investments up to USD0.02 million

• Land availability on reasonable terms/price or as equity


• Government rest houses to be utilised for tourism

• Provision of beer bar licenses to hotel units with attached restaurant facilities

• Establishment of separate funds for tourism development

• Concessions for infrastructure projects on merit basis

• Five ropeway projects and connectivity improvements for identified seven tourism zones

• Adventure centres planned at 19 locations for promoting outdoor activities like trekking, mountaineering, river rafting, kayaking, canoeing, rowing, water and snow skiing

• Focus on infrastructure development through PPP

Jammu and Kashmir25

• Capital subsidy for taxi operators up to USD11,316

• Capital investment subsidy up to USD0.2 million for tourism units with investment of more than USD4 million

• Investment subsidy for modernisation of travel agencies to be 50 per cent of project cost

• DG subsidy of USD6,465

• Timber subsidy for houseboat repairs

• Subsidy for adventure equipment up to USD11,313

• Single window

• Special area development programme in place for heritage conservation of old Srinagar city clearance

• USD19.4 billion allocation during 2012-13 for infrastructure development and upgradation through public investment

• Development of nine and 18 hole golf courses, chairlift facilities, Yatri Niwas, clubs and youth hostels, museums, tourist resorts, convention centres, renovation of heritage sites, industrial training institutes, etc.

23. Haryana Tourism Policy 2008

24. Uttarakhand Tourism Policy 2001

25. http://www.pppinindia.com/policy-initiatives-jammu-kashmir.php, www.jandkplanning.com/images/Economic_Survey/32-tourism.pdf



development plans

Delhi26

• Not available • The paying Guest Residential Accommodation scheme is being revised

• Phase-II of the Garden of Five Senses tourism project at Said-ul-Ajaib likely to be completed

• Lakes and lake houses (Bhalswa lake, Sanjay lake, Sahadara lake, etc.) are being upgraded with water sports equipments

• Restoration of 30 de-notified monuments and installation of 167 signages throughout Delhi completed

• Dilli Haat type projects being promoted in different parts of Delhi

• DMRC and DTTDC sign MOU to facilitate tourism in Delhi

Uttar Pradesh

• Under the Heritage Tourism Policy, the following tax exemptions have been allowed: 100 per cent for luxury and entertainment tax; 25 per cent capital investment subsidy for project cost or USD0.2 million, whichever is less; other benefits have also be permitted under stamp duty, land use conversion charge, etc.27

• The central government has allocated USD161 million for Lucknow metro rail project to be built on PPP mode28

• USD67.9 million allocated for Jal Marg Vikas project – first inland waterway in India connecting Allahabad and Haldia29

• Increased budget for promotion and advertising of the tourism sector on the anvil 30


• The World Bank has approved USD410 million project to develop pro-poor tourism in Braj-Mathura and the Buddhist circuits

• State31 government to organise a travel mart along with FICCI32

• State government to develop the Heritage Arc connecting Agra-Lucknow-Varanasi

• An international airport at Kushinagar under PPP mode is underway

• Lucknow Haat building under construction

• An international airport at Agra to be ready by 2017

• USD22.6 million allocated to develop an area near the Taj

26. Delhi Government Tourism Website, November 2014

27. UP Tourism website, 27 November 2014 http://up-tourism.com/pdf/heritage_policy_eng.pdf

28. Preeti Panwar, “Budget 2014: Know all what Modi govt offers for Uttar Pradesh,” OneIndia.com, 11 July 2014

29. Preeti Panwar, “Budget 2014: Know all what Modi govt offers for Uttar Pradesh,” OneIndia.com, 11 July 2014

30. “Tourism ad budget set for major hike,” The Indian Express, 17 October 2014

31. “Integrated Plan for developing Buddhist Circuits in UP and Bihar: Tourism Ministry,” ndtv.com, 17 July 2014

32. “Tourism ad budget set for major hike,” The Indian Express, 17 October 2014



development plans

Rajasthan33

• The Land and Building tax exemption limit raised from USD8,080 to USD 32,322 (also applicable to tourism related projects)34

• No tax on work-book, biogas, ‘reetha and shikakai’ and takeaway cooked food from restaurants

• Paying guest house and heritage hotels approved by Tourism Department exempted from luxury tax

• New Tourism Unit Policy

• Development of Mega Desert Tourism Circuit comprising Bikaner, Jodhpur, Jaisalmer, Pali, Mount Abu and Sambhar (initiated with USD8 million)

• Rajasthan Divas celebrations to be organised on large scale

• 35 forts to be leased to private players

• GIS mapping for tourism related infrastructure facilities.

• MoU to connect places of religious tourism

• Two MoUs were signed for establishing solar parks with power generation capacity of 5,000 megawatts each37

• Plans towards Salt Tourism – Developing Sambhar Lake Area (USD 6 million for developing infrastructure)

Chandigarh

Not available • Film Tourism Policy drafted by the Punjab Heritage and Tourism Promotion Board35

• Single window clearance for film producers on the anvil

• Department of Tourism has introduced a concept of ‘Night Tourism’ for tourists intending to see the city at night

• In addition, ‘Sports Tourism’ is also being promoted in collaboration with various sports federations and academies

• Society for Tourism and Entertainment Promotion in Chandigarh (STEPS) has been set-up to promote tourism and entertainment in Chandigarh in accordance with the policies and action plans of the Chandigarh Administration36

• Chandigarh airport is being upgraded 38

• Nehru Centre for Performing Arts is being developed to include an international convention centre and theatres

• Multi-level parking is being made for Sector 17

• Eco Tourism is being promoted through the development of Botanical Garden

• Construction of second state library is being completed

33. Rajasthan Budget FY’14: Sops galore for tourism sector, The Indian Express article, July 2014

34. Ministry of Micro, Small and Medium Enterprises, Government of India, November 2014

35. Rajasthan inks five deals for infrastructure development, Business Standard article, October 2014

36. “Soon, Policy for promoting film tourism in Punjab,” The Pioneer, 18 September 2014

37. Chandigarh Tourism, CITCO

38. Chandigarh.gov.in


State wise amount sanctioned* by the ministry of tourism during the eleventh plan period 2012-2013 and 2013-014 of the twelfth five year plan

State12th Five-Year plan (USD million)

2012-2013 (Till 30 September 2013)

Uttarakhand 25.5

Jammu and Kashmir 24.8

Uttar Pradesh 15.5

Himachal Pradesh 5.0

Delhi 4.1

Punjab 0.0

Haryana 0.0

Rajasthan 0.0

Some north Indian states are not actively using available funds.

Source: India Tourism Statistics, Ministry of Tourism (2012)* Includes Projects relating to Product / Infrastructure Development for Destinations and Circuits (PIDDC), Human Resource Development (HRD), Fairs and Festivals and Rural Tourism (RT)

In addition to the initiatives and policies implemented by state governments, the Indian government has also recently introduced several schemes and initiatives aimed at promoting tourism in the country. These initiatives, meant to help the country emerge as a preferred tourism destination, can also help north Indian states to augment their tourism initiatives.

To ease the entry of foreign tourists in India, the government is set to launch e-visas that allow entry through electronically-stored authorisation, eliminating the need for a physical visa. These visas would be available at nine airports (which are yet to be declared). Thirty countries have been identified to whom the e-visas will be available. It is expected that this initiative will significantly boost foreign tourist arrivals in the country.39

Along with this, the government announced a sum of USD30 million to create five tourist circuits around specific themes in the cities of Mathura (Uttar Pradesh) , Amritsar (Punjab), Gaya (Bihar), Kanchipuram (Tamil Nadu), Vellankanni (Tamil Nadu) and Ajmer (Rajasthan). The National Heritage City Development and Augmentation Yojana (HRIDAY) is expected to be launched for conserving and preserving the heritage of these cities.40

In addition, USD16 million has been put aside for the National Mission on Pilgrimage Rejuvenations and Spiritual Augmentation Drive (PRASAD) and its implementation. Aimed at promoting and strengthening pilgrimage tourism,

this programme would greatly benefit states such as Uttarakhand, Himachal Pradesh and Punjab that have a number of popular shrines.41

Among other initiatives planned by the government, its cleanliness drive (Swach Bharat Abhiyan) is being viewed as a boost to the tourism industry, enabling the promotion of clean tourism destinations in the country. Related to this initiative the government plans to clean the Ganges river in and around the city of Varanasi and develop the banks of the river along the stretch that flows through the city. This is being undertaken to attract more tourists to the city, which already is a popular destination for both foreign and domestic tourists.42

In addition, the government is aiming to develop integrated circuits to help boost the volume of tourist visits. Five circuits have been identified throughout the country to be developed at a cost of about USD83 million. One of the circuits is the Buddhist circuit covering destinations in Uttar Pradesh and Bihar. This circuit plans to cover routes and sites where Buddha spent his time, grew up and delivered his first sermon.43

The Ministry of Tourism also recently launched a smartphone application that provides information about destinations and helps travellers plan their holiday in India.44

39. Ministry of Tourism, 19 September 2014; Govt’s pro-tourism vision to boost travel industry, Forbes, July 2013

40. Ministry of Tourism, 19 September 2014

41. Ministry of Tourism, 19 September 2014

42. New government to boost tourism in India, Travel Daily India, November 2014

43. Integrated Plan For Developing Buddhist Circuits in UP and Bihar: Tourism Ministry, NDTV, 17 July 2014

44. Ministry of tourism launches the ‘Incredible India’ mobile application, The Time of India, 3 September 2014


Trends shaping north Indian tourism

Source: 4 things to know about India’s next crown jewel, Medical Tourism, Forbes India (November 2014)

There are certain trends in the north Indian tourism space that provide a lot of potential for growth of the industry. These trends have already started to shape the tourism industry in the region.

Medical tourism: Although relatively small, medical tourism, which refers to visits by tourists for treatment of ailments, is increasing in north India. The region not only attracts medical tourists from other Indian states but also from neighbouring countries, Africa and the Middle East6. This form of tourism is largely restricted to the cities of New Delhi and Chandigarh.

As per Ministry of Tourism data, Maharashtra, Tamil Nadu and Delhi were the top destinations for medical tourism in India in 2010. Of the top ten states for medical tourism, north Indian states accounted for about 30 per cent medical tourists in that year.45

Medical tourist visits to India – top 10 states (2010)

State Visits % share

Maharashtra 5.1 28.5

Tamil Nadu 2.8 15.7

Delhi 1.9 10.6

Uttar Pradesh 1.7 9.4

Rajasthan 1.3 7.2

West Bengal 1.2 6.7

Kerala 0.7 3.7

Bihar 0.6 3.6

Himachal Pradesh 0.5 2.5

Goa 0.4 2.5

Others 1.7 9.7

45. 4 things to know about India’s next crown jewel, Medical Tourism, Forbes India (November 2014)


Growth of specialty healthcare capabilities and infrastructure is driving this trend. This, along with the lower cost of treatment compared to other parts of the world, is attracting an increasing number of medical tourists. It is estimated that 2.3 lakh tourists visit India annually. A study states that the number of people arriving in the country for medical treatment is set to double over the next four years. By 2018, the Indian medical tourism industry is expected to reach USD6 billion.46

Apart from the central government, some state governments are taking initiatives to attract medical tourists. For instance, the Punjab government has planned a 300-acre medicity at New Chandigarh, which is planned to serve as the centre of medical tourism in the state.47

Adventure tourism: The terrain and topography of some states in northern India are suitable for adventure tourism – due to the Himalayan mountain range in the northern part of the country; there are opportunities for rafting, trekking, mountaineering and other forms of adventure activites in the region.

The past decade has witnessed the mushrooming of several adventure tour operators in north Indian states. The presence of several rivers in the region has resulted in a boom in the white water rafting segment also. The mountains of north India has also made trekking and hiking very popular with tourists; for instance, Ladakh alone saw a 35 per cent jump in bookings for adventure tours in 2013, compared with 2012.48

The government has also taken note of this and is now promoting adventure tourism through initiatives mentioned below:

• A voluntary scheme for Approval of Adventure Tour Operators, which is open to adventure tour operators.18

• The Ministry of Tourism has formulated a set of guidelines on Safety and Quality Norms on Adventure Tourism as Basic Minimum Standards for Adventure Tourism Activities. These guidelines cover land, air and water based activities, which include mountaineering, trekking, hand gliding, paragliding, bungee jumping and river rafting.18

• Central Financial Assistance is being extended to various State Governments/Union Territory Administrations for development of Tourism Infrastructure in destinations including Adventure Tourism destinations.18

• A campaign titled ‘777 Days of the Incredible Indian Himalayas’ aimed at promoting the Himalayas internationally was launched on 27 September 2013. The campaign aims to attract international tourists to India during the lean summer season. The Ministry of Tourism has decided to meet 50 per cent of the peak fee chargeable by the Indian Mountaineering Foundation (IMF) from the climbing expeditions during the period of 777 days of the campaign.49

North Indian states are also promoting adventure tourism in their respective states, for e.g., the Uttarakhand government has allocated USD2.7 million50 to develop facilities for rafting, kayaking, rock climbing, trekking and mountain biking; similar, initiatives are being implemented by the Himachal Pradesh government.

Religious tourism: North Indian states are home to a number of religious destinations: Golden Temple in Punjab, Kedarnath and Badrinath in Uttarakhand, Ajmer Sharif in Ajmer, Vaishno Devi in Jammu and Kashmir, etc. As a result the region receives a large number of religious tourists throughout the year.

In line with the increase in tourist visits to north India, religious tourism is also on the upswing over the years. This is largely being driven by the improving infrastructure and accessibility to these places. For instance, in Uttarakhand alone, visitors to Kedarnath grew from 1,69,217 tourists to 5,75,040 during 2003 and 2012, while visits to Badrinath increased from 1,34,010 to 5,95,020.51

Religious tourism is expected to continue to account for a large part of visits to north India. The state and central governments are also playing a part in driving religious tourism in north India through initiatives and programmes aimed at making the experience of tourists better through infrastructure development. The Indian government has launched the PRASAD programme that Uttarakhand to revive tourism in flood-affected areas, Business Standard, February 2014 focus on promoting religious tourism in specific pilgrimage locations.

The Uttarakhand government has planned a series of steps to revive religious tourism in the state after the floods in 2013. The government Uttarakhand to revive tourism in flood-affected areas, Business Standard, February 2014 provide 33 per cent of the capital subsidy with a maximum of 15 lakh to new ventures in the tourism sector. The scheme will be applicable for the next five years in the affected districts. A separate village cluster tourism scheme is also planned to be launched under which a group of villages will be provided a grant upto UDD0.3 million for strengthening infrastructure facilities.52

46. 4 things to know about India’s next crown jewel, Medical Tourism, Forbes India (November 2014)

47. India medical tourism industry to reach D6 billion by 2018, Mint article, July 2014

48. The Rise of Adventure Travel in Ladakh, India: Year 2013 Sees a 27per cent Jump from Last Year, PRWeb, March 2013

49. Ministry of Tourism Annual Report, 2012-2013

50. Over a dozen adventure tourism destinations soon in Uttarakhand, The Economic Times, June 2014

51. Govternment overlooked unregulated religious tourism in Uttarakhand, Hindustan Times, June 2013

52. Uttarakhand to revive tourism in flood-affected areas, Business Standard, February 2014


The way forward

The northern part of India holds ample potential for tourism, which can be fulfilled through collaborative efforts between the government and the private sector. There are a number of measures being taken by the government and commercial establishments towards this; at the same time further efforts need to be made to quicken the growth of the industry. Challenges around tourism infrastructure need to be addressed simultaneously with designing marketing and promotional campaigns for tourism in north India to flourish. Expectations from the government

• Projection of India’s image as a safe and secure tourist destination: Further steps need to be taken to ensure safety and security of tourists, especially women travellers. Health related concerns of tourists should also be addressed.

• Development of tourist destinations across states: Though development has been steady, further action has to be taken to boost growth in the region. More tourism circuits need to be identified and developed. Infrastructure support also needs to be ensured for new destinations to prosper.

• Uninterrupted travel within circuits: To enhance the travel experience of visitors, payment of road tax, toll, etc., while entering each state could be replaced by an integrated taxation regime. This could further be augmented by the development of an integrated public transport system at a national level on the lines of the Eurail network in Europe. The government has identified five circuits for integration, which would include uninterrupted travel across different modes (primarily road and rail). To facilitate this, commercial tourist vehicles can make use of smart cards to travel through state borders to locations in these circuits. In addition, interstate taxation should be rationalised for smooth journey of tourists.

• Human resource development: Along with developing physical infrastructure, training and education need to be imparted to cater to the increased manpower and skill requirements. Development of basic skill sets for casual workers, especially those in the travel trade segment are required. Vocational training can be provided to rural youth through special institutes to open up employment opportunities for them.


Expectations from the industry

• Service innovation: Innovative services (especially lodging) and forms of tourism need to be developed to ensure continuous tourist flow to the region. Global trends that can be applied to the tourism industry in the region need to be continuously explored to attract more foreign tourists. For example, sky diving (which has gained popularity worldwide) is almost non-existent in India due to the high cost and safety standards involved. This can be added to the list of options for adventure tourism in northern India.

• Use of technology: Investment in technology can be significantly enhanced by private corporations. Use of advanced software and hardware has the potential to transform the tourism market in north India and in the country. For instance, the use of analytics can enable decision makers to understand tourists’ needs better, which in turn can help improve quality of service. Customised tour packages can be developed to better match tourist profiles, budget and travel requirements, thereby enhancing the experience. Technology can be used to improve safety and security of tourists, such as through the use of GPS-enabled vehicles.

• Adherence to regulations and guidelines: To portray India as a suitable destination, tour operators and hospitality services providers need to follow regulations and guidelines laid down by the government. Compliance to regulations related to safety and security, environment protection, etc. need to be strictly observed.

Tourism development in north India holds a lot of promise. There is interest in tourism development and plans and policies in favour of tourism development are being implemented. The state and central government, and private corporations need to come together to enhance the impact of such plans and policies. Through collaborative efforts, northern India can emerge as the choice of destination for holidaying in the country.

CII conclave

Tourism in north India

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KPMG Contacts

Nitin AtroleyHead Sales & Markets T: +91 124 307 4887 E: [email protected]

Jaideep GhoshPartner National Head - Transport, Logistics, Leisure & Sports Sector T: +91 124 307 4152 E: [email protected]

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