With the tourist arrivals in the country showing a marked slowdown in the past few months on account of the global financial crisis and,to an extent,the Mumbai terror attacks,India is almost certain to fall short of its target of receiving 10 million visitors by 2010. According to the preliminary figures,India received about 5.37 million tourists in 2008 slightly more than the 5.08 million in 2007,but way less than the 6.5 million aimed for by the Government this year. The growth in foreign tourist arrivals,which was hovering between 12-14 per cent for the past few years,dropped to 5.36 per cent in 2008. Though better than the global average of 2 to 2.5 per cent,the decline in tourism growth rate has upset the Government projections and forced it to reconsider its target for 2010 when India will host the Commonwealth Games. With the impact of the crisis expected to last another year at least,the Tourism Ministry is beginning to realise that a target of more than 7.5 million for 2010 is not realistic. The absence of major incentives from the Government does not help. Despite repeated requests from the Tourism Ministry,the only boost for the sector in the two economic bailout packages announced by the Government has been to allow external commercial borrowings in the hotel sector. Most of the big-ticket steps suggested by the ministry have either been ignored or put on hold. The ministry has been stressing for a deemed export status on the sector,reduction in luxury tax,making all new hotels all over the country eligible for the tax-break scheme and a revival of Section 80 HHD of the Income Tax Act,which makes at least 50 per cent of the foreign exchange earned by the hotel industry and tour and travel operators exempt from income tax. In fact,immediately after the first alarm bells had sounded in the ministry in October 2008,it had written to the Ministry of External Affairs asking if the visa fees levied on foreign travellers could be waived. At $35 per person and more than five million tourists a year,this would have meant a loss of about 175-180 million dollars to the national exchequer. But the Tourism Ministry was convinced that this was a small price when the receipts from foreign tourists had been in excess of $10 billion. There has been little movement on these suggestions. The bailout packages so far have concentrated on fiscal and monetary measures to instill confidence in the economy. Industry stakeholders point out that governments in other countries have been far more responsive to the concerns of the toursector. Thailand has abolished visa fees while Switzerland has introduced reduced tour packages. Last week,the Tourism Ministry announced a few steps that it can implement by itself. Roping in stakeholders like airline companies,hotel associations and tour operators,the ministry announced incentives like buy-one-get-one-free offers on international air tickets and one night complimentary stays at select destinations. But the industry believes the real thrust has been missing. For a sector that is highly labour-intensive and earns a huge amount of foreign exchange per capita spending by a tourist in India is among the highest in the world the government needs to be more responsive. The 10-million tourists target for next year might be beyond reach,but officials feel putting Indias growth rate back in the region of 12-14 per cent in 2009 is not impossible if some comprehensive measures are taken on an urgent basis.
