March 25, 2009 / 11:55 AM / 10 years ago

India tourism set to boom despite set-backs - report

MUMBAI (Reuters) - The Indian tourism sector is seen generating $42.8 billion by 2017, a 42 percent surge from 2007, an industry research note by auditing and consulting firm Deloitte Touche said on Wednesday.

Passengers on the new luxury train "Royal Rajasthan on Wheels" (RROW) are welcomed upon their arrival at the railway station in Jaisalmer in the desert Indian state of Rajasthan in this January 13, 2009 file photo. REUTERS/Vijay Mathur/Files

Despite the challenges being faced in terms of a slowing economy, sluggish demand and security concerns, the country was fighting back and tourism developments were taking place, it said.

“Although there will inevitably be some short- to medium-term set backs, the long-term outlook remains positive,” it said.

Though the India economy had slowed, it was still growing faster than the rest of the world.

In 2009, the country is seen rising 6.1 percent, compared to the world output, which is seen falling 0.4 percent, according to the Economist Intelligence Unit, an arm of the Economist Group.

“Despite the deepening world economic crisis, India’s economy remains in decent shape and is still experiencing some of the strongest growth rates in the world,” the Deloitte report said.

Realising the potential in India, international and domestic hotel chains were rushing to cash in on it.

According to the global authority for hotel real estate, Lodging Econometrics, there were 73,793 hotel rooms in the pipeline of which 11,207 were due to open in 2009 and 22,522 in 2010, it said.

International tourists account for a little over 5 million visitors, while domestic market is seen at more than 500 million.

Limited infrastructure pose a constraint to the free flow of tourists, but the Indian government is addressing the issue through upgradation of existing airports and building new ones.

Medical tourism was poised for rapid development in the future and India is busy developing first-class facilities to attract this multi-billion dollar niche market, it said.

The government has already relaxed the criteria to receive a visa for medical tourism.

It is also considering other incentives such as offering air travel and accommodation for foreign tourists who visit India for the third time.

It may also pick up the bill for tour operators promoting domestic and medical tourism and is mulling income tax exemption for hoteliers if they invest 50 percent of profits into infrastructure.

Tourist arrivals in the country slowed throughout 2008, after rising 13 percent year-on-year from 2005-2007, due to a slowdown in the main source markets for India, the U.S. and U.K., which account for more than 15 percent of all inbound tourists.

Cutting down of routes by domestic airlines and increase in airfares last year also led to a fall in the movement of people in the country.

The Mumbai terror attacks, targetting two premium hotels, also tarnished the country’s reputation, drastically reducing hotel occupancy levels, and affecting year-end travel.

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