Lax policy choking tourism, Crisil study

Sample this: India has witnessed a 20 per cent growth in foreign traffic inflow in 2003 which is expected to touch 3 million by March 2004, say senior industry officials.

Now consider this: an increase of 1 million international tourist arrivals to India would contribute Rs 7,000 crore (Rs 70 billion) to its gross domestic product, of which, Rs 1,072 crore (Rs 10.72 billion) would flow into the government's tax kitty, says a report on the tourism sector by Crisil.

Indian tourism has the potential to become global. However, a delay in rolling out policy levers such as the civil aviation policy is posing to be an impediment.

"While air capacity expansion is a must, India needs to be promoted in the long haul traditional markets such as the US and Europe in a better way. Other initiatives such as promoting infrastructure investment and re-assessment of tourism tax structure against job creation and GDP growth multiplier should be taken at the earliest," Ashwini Kakkar, chief executive officer and managing director of Thomas Cook said.

A study, on behalf of Department of Tourism  -- Government of India, conducted by Crisil Infrastructure Advisory and Mahajan & Aibara clearly highlights the insights on removing policy bottlenecks in civil aviation to ensure an increase in international tourist arrivals.

The civil aviation sector is pivotal for boosting international tourism and there is a direct correlation between airlines seat capacity and international tourist arrivals. A case in point is Hong Kong where it is observed that a 97 per cent increase in air seat capacity led to a 95 per cent increase in visitor arrivals over a 7-year period.

In India, while there is excess capacity on non-critical routes, capacity constraints are choking critical routes. As per the study, India needs to reprioritise its seat capacity allocations and an increase in capacity both by Indian and foreign carriers are required to remove bottlenecks.