India's tourism begins to feel the global pinch

By Matthias Williams

NEW DELHI (Reuters) - "Incredible India" is what the country's energetic promotional campaign calls it. But behind the glossy brochures is an increasingly hard fight to entice foreign tourists.

The worst financial crisis in 80 years, high oil prices and a slew of militant attacks has hit an industry that has basked in double-digit growth numbers of both domestic and foreign tourists in recent years, according to data from the Ministry of Tourism.

October saw an increase of just 1.8 percent in the number of foreign tourist arrivals compared to the same time in 2007, prompting the Indian government to ask hotels to slash their prices by 10 to 15 percent in the hope of keeping demand high.

"We are seeing the early stages of a slackening of the market," Madhavan Menon, the managing director of Thomas Cook India Ltd, told Reuters, adding that: "2009 is going to be a difficult year."

A slump risks undermining India's enormous growth potential in the tourism sector, which the U.N.'s World Tourism Organisation (UNWTO) said has also been let down in the past by a lack of adequate accommodation and poor infrastructure.

Despite its vast size, diversity, and array of historical monuments, India still ranks at no. 42 in the world's holiday destinations of choice -- below much smaller countries like Belgium (33rd) and Hungary (26nd), a UNWTO report said.

Even so, India's tourism industry is thought to contribute around 6 percent of the country's GDP and give employment to more than 40 million people.

As the tourist season kicks off in the winter months, both domestic and foreign travellers are still flocking to the famed Taj Mahal, with over 300,000 visiting the 17th century mausoleum in October alone.