Tourism- India’s New Economic Frontier

• 16 Feb 2026

This editorial is based on “Give tourism a boost” which was published in The Hindu business line on 13/02/2026. This editorial examines how tourism can become a transformational engine for jobs, growth, forex earnings, and soft power in India, yet remains chronically underfunded and poorly executed. It argues for shifting from ad-hoc promotion to capacity creation, sustainability, and infrastructure-led reforms to unlock tourism’s full economic potential.  

For Prelims: PRASHAD Scheme, UDAN Scheme, National Digital Tourism Mission (NDTM),DigiYatra,UNESCO World Heritage Sites. 

For Mains: Significance of tourism sector, key issues associated with tourism sector and Measures Needed.

Tourism is one of India’s most underexploited growth engines, contributing 6.7% to GDP while employing nearly 48 million people. With every rupee invested generating 3.5 times more jobs than the economy’s average, the sector offers unmatched employment potential. Despite possessing 44 UNESCO World Heritage Sites, India attracts only 10 million foreign tourists, far below its peers. Strategic scaling of tourism could transform it into a $1-trillion GDP and 100-million-jobs sector by 2035. 

What is the Significance of the Tourism Sector in India?  

• Economic Growth Engine & GDP Multiplier: Tourism has evolved from a leisure activity into a critical economic pillar, acting as a high-multiplier sector that stimulates demand across construction, hospitality, and transport industries.  
  • The post-pandemic recovery has been "V-shaped," with domestic consumption shielding the sector from global headwinds, making it a resilient driver of the $5 trillion economy goal. 
  • The growing economic salience of tourism is evident from WTTC projections, which estimate that India’s travel and tourism sector will contribute nearly  Rs 42 trillion to the economy in 2035, underscoring its potential as a major driver of growth, employment, and foreign exchange earnings. 
• Massive Employment Generator: This sector is highly labor-intensive and inclusive, offering low-barrier entry jobs for the unskilled while simultaneously creating high-value service roles.  
  • It uniquely empowers women and rural youth, reducing disguised unemployment in agriculture by shifting the workforce to the service sector through homestays and gig-economy roles. 
  • For instance, tourism already employs 48 million people, and every ₹1 invested generates 3.5 times more jobs than the economy-wide average. 
• Foreign Exchange (Forex) Stabilizer: Inbound tourism serves as a vital "invisible export," significantly narrowing the Current Account Deficit (CAD) by bringing in debt-free foreign currency.  
  • The recent depreciation of the Rupee has made India a cost-competitive destination, further incentivizing foreign spending on luxury, heritage, and wellness segments. 
  • India has positioned itself prominently within the global tourism landscape, accounting for 1.40% of total international arrivals and contributing 2.02% to worldwide tourism receipts.  
    • In 2024, India’s Foreign Exchange Earnings (FEEs) from tourism amounted to USD 35.016 billion. 
• Catalyst for Infrastructure Development: Tourism demand is forcing a rapid upgrade of "last-mile connectivity," justifying heavy capital expenditure (Capex) on airports, expressways, and railways.  
  • This creates a virtuous cycle where better infrastructure attracts more tourists, which in turn funds further maintenance and expansion of public assets. 
  • Improved connectivity has boosted tourism under the UDAN Scheme, which has operationalised key tourism-specific air routes linking remote destinations to metro hubs.  
    • Complementing this, the launch of 160+ Vande Bharat trains has sharply reduced travel time to major tourist centres such as Jaipur, Puri, and Varanasi, enhancing tourist inflows. 
• Socio-Cultural Soft Power & Local Economic Revitalization: The government’s focus on "pilgrimage rejuvenation" has transformed religious travel from a seasonal, low-value activity into a year-round, high-spending economic ecosystem.  
  • This shift is creating new urban centers around temple towns, driving infrastructure upgrades that benefit local populations beyond just tourists. 
  • The impact of targeted religious tourism is evident under the PRASHAD Scheme, which has sanctioned 54 projects to upgrade pilgrimage infrastructure.  
    • For instance, the Ayodhya Ram Mandir inauguration led to a significant expansion of the local economy. 
• Medical Value Travel (MVT) Leadership: India is positioning itself as the "Pharmacy and Hospital of the World" by leveraging low-cost, high-quality healthcare combined with traditional wellness systems (AYUSH).  
  • The "Heal in India" initiative effectively captures the global patient demographic seeking affordable surgeries and holistic rejuvenation. 
  • The growing role of medical tourism is evident as, Medical tourism in India increased by around 33% year-on-year in 2023. (Investment Information and Credit Rating Agency of India Limited) 
  • India has expanded its e-Medical and e-Medical Attendant visa facility to citizens of 171 countries, significantly boosting medical tourism 
• Pioneering "Green" Growth and Ecological Stewardship: Moving away from mass tourism, Indian tourism policy is now pivoting toward "carrying capacity" and sustainability to preserve fragile ecosystems.  
  • Initiatives like Swadesh Darshan 2.0 focus on destination management rather than just promotion, integrating the "Travel for Life" mantra to nudge tourists toward responsible behavior. 
  • India’s shift toward sustainable tourism is reflected in Swadesh Darshan 2.0, under which 57 destinations such as Gandikota and Dholavira are being developed as responsible tourism hubs.  
    • For instance, Lakshadweep’s eco-resort projects is driving solar energy use and zero-waste protocols to safeguard fragile coral ecosystems. 
• Tool for Soft Power Projection & Global Diplomacy: Tourism acts as a primary vehicle for cultural diplomacy, breaking stereotypes and building a "brand India" narrative globally.  
  • The G20 presidency successfully showcased India’s safety, scale, and diversity, effectively countering negative travel advisories and opening new markets in non-traditional regions. 
  • India’s tourism soft power received a boost post-G20, with global travel searches for India rising by 45% in late 2024.  
    • For example, hosting G20 meetings in Srinagar and Arunachal Pradesh simultaneously asserted sovereignty and repositioned Kashmir as a safe, globally visible tourist destination. 
• Driving Economic Sophistication & High-Yield Value Capture: The significance of this sector also lies in its transition from a volume-based model to a value-driven ecosystem, targeting segments that maximize revenue per visitor while ensuring year-round economic activity. 
  • By institutionalizing the wedding industry through "Wed in India", India is actively reversing "capital flight." Retaining the weddings of affluent citizens within domestic borders stimulates a massive localized value chain, benefiting sectors from high-end hospitality to traditional artisans and jewelry. 
  • Also, the development of world-class venues like Bharat Mandapam (hosting Impact AI Summit 2026) and Yashobhoomi has turned tourism into a catalyst for high-stakes business commerce.  
    • These centers allow India to compete for the global MICE market, which generates significantly higher per-capita spending compared to leisure travel and fosters international B2B partnerships. 
• Regional Decongestion & Rural Development: Tourism is the most effective tool for decentralizing development, transferring wealth from urban centers to rural peripheries through homestays and agri-tourism.  
  • This reduces migration pressure on metros and preserves rural heritage by giving it economic value, incentivizing locals to protect their culture. 
  • To promote decentralised tourism, the Ministry sanctioned ₹3,295 crore as interest-free loans to States in 2024–25 for developing Iconic Tourist Centres to Global Scale. 
  • For instance, the Vibrant Villages Programme leverages development and tourism to transform border settlements from “last villages” into “first villages” for visitors, boosting livelihoods and strategic visibility. 

What are Key Issues Associated with the Tourism Sector in India? 

• Severe Infrastructure Deficit & Last-Mile Connectivity: While major airports are world-class, the "last-mile" connectivity to heritage sites and remote eco-tourism hubs remains broken, causing high travel fatigue.  
  • The disparity between rapid air travel and decrepit road conditions in hilly or tribal circuits discourages high-value foreign tourists who prioritize comfort and seamless logistics over raw adventure. 
  • While over 100 new routes were launched in 2024 (including 20 in the Northeast), the "operational inconsistency" remains high in hilly areas where weather conditions frequently cause cancellations, and limited night-landing facilities at airports like Shimla or Kullu restrict consistent scheduling. 
    • For example, a 10-14 day "highlights" trip to Arunachal Pradesh or Nagaland often requires 3-5 days of pure transit. 
• Overtourism & Ecological Collapse: The rebound of the tourism sector post-pandemic has triggered an ecological crisis in hill stations, where tourist influxes violently exceed the "carrying capacity" of fragile ecosystems.  
  • This unregulated mass tourism leads to land subsidence, water scarcity, and infrastructure collapse, turning scenic paradises into concrete slums and threatening long-term sustainability. 
  • Unregulated tourist inflows have pushed fragile Himalayan ecosystems beyond their limits, with popular circuits like Char Dham seeing visitor numbers soar from ~1 million annually in the early 2000s to over 5 million in 2023, far exceeding carrying capacities and stressing water, waste, and slopes.  
    • For instance, Kedarnath’s real sustainable carrying capacity is around 9,833 visitors/day, yet actual numbers typically surpass this, contributing to landslides, waste crises and ecological degradation. 
• Taxation & Price Competitiveness Issue: India’s high taxation makes it a "cost-prohibitive" destination compared to neighbors like Vietnam or Thailand, diverting budget-conscious international travelers.  
  • The 18% GST on luxury hotels acts as a tariff barrier, neutralizing the benefits of a weaker Rupee and making package tours significantly more expensive than Southeast Asian competitors. 
  • While the September 2025 GST rationalization lowered taxes for mid-range hotels (₹7,500 and below) to 5%, luxury properties above this threshold remain stuck at higher GST. 
    • This creates a sharp "fiscal cliff" where a slight increase in room quality results in a disproportionate tax jump, making India’s premium heritage and wellness stays significantly pricier than those in Bali or Phuket. 
• Safety Perceptions & Crimes Against Women: Despite improved policing, the global perception of India as "unsafe for solo female travelers" remains a stubborn brand order, fueled by sporadic but high-profile cases.  
  • This "fear factor" forces foreign tourists to stick to sanitized "Golden Triangle" bubbles, preventing wealth distribution to safer but lesser-known rural or tribal destinations. 
  • Travel advisories from nations like the US and UK frequently flag "sexual assault" risks, dampening the inbound solo-traveler market.   
    • Recently, the Fort Kochi police have registered a case over alleged sexual assault of a foreign national woman who was in the city to attend the Kochi-Muziris Biennale. 
• Acute Waste Management Crisis: The "use-and-throw" tourism culture has turned pristine landscapes into landfills, with mountains and beaches choking on single-use plastics.  
  • Local municipalities in tourist hubs lack the revenue or technical capacity to process the seasonal waste spikes, leading to open dumping that destroys the very visual appeal tourists pay to see. 
    • The lack of segregation at source and processing plants in remote areas leads to "legacy waste" piling up in valleys and oceans.  
  • The ecological costs of unmanaged tourism are visible in Lakshadweep, where the UT’s forest and environment department reports nearly 4,000 tonnes of dry waste lying uncollected, despite mandates to ship it to the mainland.  
    • This waste backlog threatens fragile coral ecosystems, exposing the sustainability gap in island tourism models. 
• Skill Gap & Service Quality Deficit: There is a critical shortage of quality-trained hospitality staff who possess soft skills, foreign language proficiency, and digital literacy.  
  • While the industry demands "experience curators," the workforce is often unskilled gig-workers, leading to poor service standards that damage the "Atithi Devo Bhava" brand promise and reduce repeat visitor rates. 
  • Despite headline-grabbing luxury hotel signings, India’s hospitality sector faces a skills gap, as 8,656 seats remained vacant in NCHMCT-affiliated Hotel Management Institutes in 2024, highlighting weak vocational uptake amid rapid sectoral expansion. 
• Regulatory Red Tape & Licensing Hurdles: Currently, the travel and tourism sector is largely treated as a state subject in India. 
  • And starting and running a tourism business in India involves a labyrinth of licenses (fire, police, excise, municipal) that varies violently by state.  
  • This "license raj" discourages innovation and small entrepreneurs (SMEs), forcing many homestays and adventure operators to function in a grey market without safety audits or insurance. 
• Fragmented Marketing & Branding: India lacks a cohesive, single-window brand narrative like "Amazing Thailand" and “Visit Saudi” with states often competing against each other rather than collaborating.  
  • This fragmentation confuses international tourists, who see disjointed campaigns (e.g., "Kerala: God's Own Country" vs. "MP: MP Ajab Hai, Sabse Gajab Hai!") without a unified national value proposition or itinerary. 
  • Disparate state policies and marketing budgets prevent the creation of cross-state thematic circuits. 
• Geopolitical & Social Instability Sensitivity: Tourism in India is hyper-sensitive to internal social unrest and border tensions, which trigger immediate mass cancellations and travel advisories.  
  • Incidents in regions like Manipur or Jammu & Kashmir create a "ripple effect" of fear, causing tourists to abandon entire regions, devastating local economies dependent on seasonal cash flow. 
  • The vulnerability of tourism to internal instability is evident in Manipur, where official data (November 2025) shows tourist arrivals collapsing from 1.79 lakh in 2019–20 to about 17,000 in 2024–25, a 90.5% decline. 

What Measures are Needed to Unlock the Potential of the Tourism Sector in India? 

• Accelerating Integration of National Digital Tourism Mission (NDTM): The implementation of a "Unified Tourism Interface" is essential to create a seamless digital layer across the travel lifecycle, integrating UPI, DigiYatra, and ONDC.  
  • By standardizing digital data exchange between transport, hospitality, and government agencies, India can offer frictionless "One-Click" travel experiences for international visitors.  
  • This backend integration will enable real-time crowd monitoring and personalized itinerary curation through AI-driven intelligence hubs. 
• Granting Full Infrastructure Status to Hospitality: Formally according "Infrastructure Status" to all hotel projects, including budget and mid-market segments, would unlock low-cost, long-tenure institutional financing and favorable interest rates.  
  • Currently, the lack of this status restricts capital flow to Tier-2 and Tier-3 cities, where the potential for regional growth is highest but financial risks are perceived as significant.  
  • This move would drastically reduce the cost of asset creation, encouraging global FDI and domestic private investment. 
• Implementation of Carrying Capacity-Based Regulation: To prevent the ecological collapse of fragile hill stations and heritage zones, a "Smart Permit System" based on scientific carrying capacity must be enforced at the municipal level.  
  • By utilizing IoT sensors and real-time footfall data, authorities can dynamically adjust entry fees or pause arrivals once a destination hits its environmental threshold.  
  • This protects the "brand equity" of the site and ensures that tourism remains a sustainable resource rather than an extractive industry. 
• Establishment of Specialized Tourism Police & Safety Cells: Safety remains a psychological barrier, hence, the nationwide deployment of a dedicated "Tourist Police" wing, trained in foreign languages and soft-skill crisis management, is imperative.  
  • These units should operate from visible, tech-enabled kiosks in all high-footfall zones and be linked to a central 24/7 multilingual emergency helpline.  
  • Strengthening the ground-level security apparatus will directly counter negative global travel advisories and boost the confidence of solo female travelers. 
• Rationalization and Uniformity of Tourism GST: The current tiered GST structure for hotels and transport is complex and often makes India more expensive than its Southeast Asian competitors.  
  • Implementing a uniform, competitive "Flat Tourism Tax" or providing "Deemed Export" status to earnings from foreign tourists would immediately enhance price competitiveness.  
  • This fiscal relief would allow operators to reinvest in service quality and sustainability upgrades, creating a more robust and price-transparent market for global travelers. 
• Decentralized Skill Development via IIM-Partnered Hubs: A "National Institute of Hospitality" (Union Budget 2026) should be established to bridge the gap between academic theory and industry demand, focusing on vocational training in Tier-2/3 towns.  
  • By partnering with premium institutes like IIMs to train "Experience Curators" and "Storyteller Guides," the sector can move away from transactional service to high-value experiential tourism.  
  • Upskilling a fixed set of guides annually in niche areas like heritage restoration and digital content creation would create a specialized, elite workforce. 
• Last-Mile Multimodal Connectivity: Unlocking the "hinterland potential" requires a dedicated "Tourism Transport Fund" to link regional airports with last-mile road networks through high-quality electric bus fleets.  
  • Expanding the Vande Bharat sleeper networks to cover specific tourist circuits, such as the Buddhist Trail or the Desert Circuit, will provide world-class rail comfort that appeals to both domestic and foreign demographics. 
  • Seamless multi-modal integration ensures that the journey itself becomes an attractive part of the tourist experience. 
• "Wed in India" and MICE Infrastructure Clustering: India should aggressively develop dedicated "Global Event Districts" that combine massive convention centers (MICE) with luxury hospitality and specialized wedding venues in a single ecosystem.  
  • By providing single-window clearances for international conferences and mega-weddings, India can capture a larger share of the global wedding market.  
  • This clustering approach reduces logistical hurdles for event planners and creates high-revenue peaks during the traditional "off-season." 
• Mainstreaming Regenerative and Astro-Tourism: Beyond basic eco-tourism, policy must incentivize "Regenerative Tourism," where a portion of tourist revenue is mandatorily reinvested into local forest restoration or community heritage.  
  • Promoting niche segments like "Astro-Tourism" (Dark Sky Reserves in Ladakh/Spiti) and "Trekking Trails" in the Eastern Ghats can divert crowds from oversaturated metros to carbon-sink regions.  
  • This diversifies the product portfolio and appeals to the growing global demographic of environmentally conscious "Gen Z" travelers. 
• Transition to Single-Window Regulatory Clearances: The "Ease of Doing Business" in tourism is currently hampered by the requirement of different licenses from various state and central departments.  
  • Implementing a digital "Unified Licensing Portal" with time-bound, deemed approvals would empower small entrepreneurs to start homestays and adventure sports businesses legally.  
  • Streamlining these bureaucratic bottlenecks is the most effective way to formalize the informal sector and ensure standardized safety audits across the country.

Conclusion 

Tourism holds the unique potential to simultaneously deliver growth, jobs, forex, regional balance, and soft power for India. However, without addressing infrastructure gaps, ecological limits, safety perceptions, and skill shortages, these potential risks remain unreleased. A shift from volume-driven to value-driven, sustainable, and digitally enabled tourism is imperative. If governed with foresight, tourism can evolve from a leisure sector into a cornerstone of India’s inclusive and resilient development model. 

Drishti Mains Question

Tourism in India has the potential to act as a growth engine, employment generator, and soft power tool, yet remains structurally underleveraged. Examine the reasons and suggest measures to unlock its full potential.

 

FAQs

1. Why is tourism important for India’s economy?
High GDP multiplier, employment creation, and forex earnings.

2. What limits India’s tourism potential?
Infrastructure gaps, overtourism, safety concerns, skill shortages. 

3. How does tourism support rural development?
Through homestays, agri-tourism, and decentralised income flows.  

4. Why is sustainability crucial in tourism policy?
To prevent ecological collapse and preserve long-term viability.

5. What makes tourism a soft power tool?
Cultural diplomacy, nation branding, and global perception shaping. 

UPSC Civil Services Examination, Previous Year Question (PYQ)

Mains 

Q.1 How can the mountain ecosystem be restored from the negative impact of development initiatives and tourism? (2019)  

Q.2 The states of Jammu and Kashmir, Himachal Pradesh and Uttarakhand are reaching the limits of their ecological carrying capacity due to tourism. Critically evaluate. (2015)