Economic Importance of Tourism in India

India is home to some of the world’s oldest civilizations. As of 2011, the nation has 1.89 billion residents who speak more than 15 official languages, follow a variety of religious traditions and live in a multitude of urban and rural centers. From the humid, tropical south to the rolling plains of the Ganges to the foothills of the Himalayas, the huge country’s geography is as varied as its population. As a result, millions of international and domestic tourists explore India annually, strongly influencing the national economy.

The travel and tourism industry is responsible for 6.1 percent of India’s Gross Domestic Product, as of 2011. The tourism industry directly and indirectly employs more than 26 million citizens, which represents 5.7 percent of the country’s total employment, according to the World Economic Forum. Additional jobs related to tourism total over 37 million , or 7.5 percent. In 2010, the tourism industry brought in more than $14 billion and experienced an annual growth rate of 24.6 percent. This revenue directly impacts the economy, especially in sectors such as hospitality, hotels, construction, handicrafts, horticulture and agriculture. The hotel industry alone employs 150,000 people.

According to the Indian Ministry of Tourism, more than 5.5 million foreign tourists visited India in 2010, representing an annual growth rate of 8.1 percent. Of the 940 million international tourist arrivals worldwide, India accounted for .59 percent, placing the country in 40th place in the rank of foreign tourists worldwide. In terms of the amount of money spent by international visitors, India ranked 16th in the world. About 900,000 foreign tourists -- 16 percent -- came from the U.S., and 700,000 -- 13.5 percent -- came from the United Kingdom. The top three nationalities of other visitors were Bangladeshi, Canadian and German. American visitors spent the most money, about $103.5 billion or 11 percent, while Spanish tourists spent $52.5 billion and French visitors $46 billion.

As India’s economy has improved with the advent of the information technology boom of the 21st century, so has its population's ability to travel. Many Indians choose to explore the diversity of their own country. In 2010, more than 740 million domestic tourists visited sites within India, representing a growth rate of 10.7 percent, according to the Indian Ministry of Tourism.

The most popular destinations for international tourists in 2010 included Mahrashtra, Tamil Nadu and Delhi, while most domestic tourists visited the states of Andhra Pradesh, Uttar Pradesh and Tamil Nadu, according to the Indian Ministry of Tourism. To attract more tourists to these and other destinations, the Indian government initiated several plans, including attracting foreign investment in hotels, restaurants and beach resorts. The government has invested almost $40 million in 37 destinations ranked as desirable tourist areas. Other economic incentives include complete tax exemptions for tourist facilities and amusement parks in Uttarakhand, and lower luxury taxes in the state of Rajasthan.