A domestic tourism opportunity has presented itself. India must seize it

While the pandemic is far from over and the memory of the devastating second wave is still fresh, the country doesn’t have a moment to lose to claw back lost ground while placing big bold bets into the future of travel and tourism in India

It all started in the spring of last year when the Covid-19 pandemic ravaged the travel industry across the world. After 18 months, the travel sector is gradually getting back on its feet with the hope that a subsequent wave doesn’t land such a hard knock again.

Tourists visit the Taj Mahal in Agra. There is a pressing need to upgrade capacity at top tourist locations, while simultaneously developing alternate tourist destinations to take the load off. (Representational image/PTI)

Over the last 20 years, the world has faced many global adversities — the dot-com bust, the 9/11 attack, the 2008 financial meltdown, among others. Covid-19 is another disruption caused by a macro-event, but its intensity is far more severe.

While the pandemic is far from over and the memory of the devastating second wave is still fresh, the country doesn’t have a moment to lose to claw back lost ground while placing big bold bets into the future of travel and tourism in India.

Defying grave predictions, there has been a rebound in travel — almost entirely led by domestic tourism. The potential of domestic tourism to boost overall economic recovery can’t be stated enough. Both developed and developing countries around the world are focusing on growing domestic travel to recover from the social and economic impacts of the pandemic.

Like all challenging situations, this pandemic-induced crisis has also presented us with an opportunity that is too important to let go of. But this needs political will, the entrepreneurial spirit of the private sector, and investment support.

A robust transportation network

Travel and tourism heavily depend on a robust transportation network operated on-road, railways, and air. Stellar work has been done on improving road networks, especially through the construction of national highways, reaching its highest-ever speed in the country in the fiscal year 2020-21.

However, there is still a lot of ground to cover to improve last-mile connectivity. In the railways, the traffic has been stagnant. Winning back that traffic needs improvement in efficiency and passenger comfort, which is distinctly low in India. The railways need radical reforms — initiating the proposal to attract private investment in passenger train service is a humble beginning by the government, but wide-ranging reforms are the need of the hour.

On air travel, focus on solving for better connectivity, especially for less explored tourism in the Northeast. Currently, less than 50% of the total routes under the UDAN scheme are operational. It is critical to make these routes operational and viable for airlines so that hidden gems such as Zuluk in Sikkim, Ziro in Arunachal, Majuli in Assam have better connectivity through commercial flights, helicopters and air taxis.

The cost of airport operations also needs to come down which means we need functional airports. Airlines even before the pandemic were struggling to cope with the high cost of operations, which impacts their ability to invest back into the sector.

While all projections point towards the huge long-term potential of the civil aviation market in India, it’s time to take some firm steps to help make the sector sustainable.

Exploring the unexplored

There is a pressing need to upgrade capacity at top tourist locations, while simultaneously developing alternate tourist destinations to take the load off. India’s top travel destinations are crumbling due to the high influx of tourists and poor infrastructural support. Water scarcity and infra issues in Shimla are well known, and this time, in between the two Covid-19 waves, Manali saw a record 18,000-plus vehicles entering the state every day on an average, during the two-week period in the month of June.

Choked roads, mid-way hold-ups, unprecedented traffic jams, overflowing parking lots are a stark reminder of the extreme stress that tourism puts on the most favoured destinations.

Before the pandemic, around 26 million Indians travelled abroad in 2018, spending an estimated $25 billion. So, the demand in big numbers is out there for us to capture and a good part of this demand cannot be directed to Indian destinations unless we elevate the overall experience.

We also need to create awareness of numerous undiscovered places in India. The tourism ministry has made a strong push with Dekho Apna Desh Campaign, but the government and private sector can collaborate towards the development of campaigns that will promote domestic travel in line with evolving travel preferences.

For the holistic development of the sector, identifying, developing and spreading awareness about unexplored travel destinations within India to ease the burden on overexposed popular locations which see more than 90% share of tourist footfall during the peak travel season.

Incentives and concessions

With a belief that the travel and tourism sector will continue to contribute significantly to the country’s Gross Domestic Product (GDP) and employment generation, as was done in the past, it is an opportune moment for timely push with concessions and incentivisation to grow domestic tourism.

For instance, extending leave travel allowance (LTA) benefits to include hotel stay, and allowing one trip every year in the next LTA block of four years could help push domestic tourism growth. The tax rebate could then be compensated up to 90% by expected incremental Goods and Services Tax (GST) revenue. Modification of GST tax slabs for hotels rooms costing up to ₹7,500 a night is another such measure, which would require a tax rebate of ₹1,400 crore, but will be compensated by more than 100% as a result of incremental travel.

Recently, the ministry of tourism initiated a proposal for the inclusion of tourism in the concurrent list of the Constitution. This move will allow both the Centre and states to formulate policies that could benefit the sector.

The move could particularly benefit the industry as it could lead to the rationalisation of property and other taxes, industry status across the board, as well as lower rates on electricity and water.

The industry needs harmonious policies. This move should lead to a better synergy between states and the Centre for tourism promotion policies as well as uniform regulations for new categories like homestays.

Rajesh Magow is co-founder and group chief executive officer, MakeMyTrip Limited

The views expressed are personal