Context

Amid rising global protectionism, highlighted recently by the US move to increase tariffs on Indian exports, India’s over-reliance on trade-sensitive sectors is becoming a point of economic vulnerability. In this context, tourism emerges as a robust, tariff-proof alternative — one that not only drives economic growth but also enhances employment, foreign exchange inflow, and soft power.

Tourism’s Untapped Economic Potential

·       A labour-intensive, inclusive sector: Tourism’s greatest strength lies in its capacity to generate employment across a wide socio-economic spectrum. From urban-based professionals in hospitality and aviation to rural artisans, transport operators, and local guides, the sector creates widespread opportunities. Its impact spans multiple domains — transportation, accommodation, handicrafts, wellness, culinary services, and entertainment — providing jobs at both the formal and informal levels.

·       Current contribution and comparative lag: India’s tourism sector currently contributes about 5% to the national GDP, a modest figure compared to the global average of 10%. Countries like Spain and the UAE, where tourism makes up nearly 12% of GDP, demonstrate the transformational potential of tourism when prioritised as a core economic strategy.

·       Foreign exchange earnings and missed opportunities: In 2024, India earned approximately $28 billion (₹2.45 lakh crore) from inbound tourism. However, this is just a fraction of its potential — estimates suggest that if tourism were to reach 10% of GDP, foreign exchange earnings could rise to $130–140 billion annually.

The outbound tourism paradox

In the same year, over 28 million Indians travelled abroad, spending between $28–31 billion globally. Indian tourists are among the world’s top spenders. Unless India offers comparable, world-class domestic tourism experiences, this revenue will continue to flow out of the country, posing both a challenge and a missed opportunity.

Future Projections and Economic Transformation

If India can double tourism’s share in GDP from 5% to 10% within the next decade, the impact would be profound:

• An additional $516 billion added to the economy annually.
• Creation of over 40 million new jobs, many of which are non-offshorable.
• Foreign exchange earnings climbing to $130–140 billion, insulating the economy against trade volatility.

Overcoming Capacity Constraints

Tourism differs from goods exports — its growth hinges on perception, ease, and experience, all of which are within policy control.

At present:

• India has only 1.8 lakh branded hotel rooms and 1.5 million unbranded rooms.
• To match rising demand and price competitiveness, India must triple this capacity across both categories.
• Scaling infrastructure is also critical for positioning India as a hub for global events and conventions — a high-value tourism niche.

Strategic Pathways to Unlock Growth

·       Destination and infrastructure development: The 2025–26 Union Budget announcement to develop 50 destinations in collaboration with state governments is a critical first move. Creating at least one globally competitive, sustainable, and brand-rich destination per state could shift India’s global image from a place to see to a place to experience.

·       Seamless connectivity and traveller facilitation: Streamlining e-visas, minimising immigration queues, and ensuring a welcoming arrival experience are essential. With Indian airlines planning to expand their fleets by 1,000 aircraft, improved connectivity will significantly enhance tourist inflows.

·       Technology and content-led promotion: India’s cultural assets are already being informally marketed by millions of digital creators.
The next step is AI-enabled content curation, and strategic tie-ups with global digital platforms, to tell India''s tourism story at scale and with sophistication.

·       Attracting private capital: Bringing tourism into the Harmonised Master List of Infrastructure will enable targeted investments. This includes PPP models in hotels, ropeways, convention centres, and wayside amenities — projects that can scale quickly and serve diverse tourist profiles.

·       Reviving and scaling domestic tourism: Domestic travellers account for 86% of India’s tourism revenue. Making interstate travel more affordable and convenient, especially for middle-income travellers, will foster: Cultural exchange, Balanced regional development, and National integration. The Dekho Apna Desh campaign can evolve into a broader movement promoting India’s internal tourism ecosystem.

Tourism as a Green and Inclusive Growth Driver

·       High economic multiplier: Every rupee spent by a tourist ripples across multiple sectors — from transport to crafts, food services, and community-based enterprises.

·       Low environmental footprint: When designed and managed sustainably, tourism can drive inclusive livelihoods without inflicting environmental damage — unlike heavy industries or extractive sectors.

·       Niche tourism opportunities: India is uniquely positioned to lead in Wellness tourism (e.g., Ayurveda, yoga retreats), Spiritual travel (pilgrimage circuits), Medical value tourism, and Cultural tourism (music, art, heritage trails). These segments align with global trends in experiential and mindful travel.

Conclusion

In a global economy where tariffs, trade disputes, and geopolitical tensions create economic uncertainty, tourism stands out as a resilient, self-sustaining, and tariff-proof growth engine. Its advantages are manifold:

• Generates jobs that cannot be offshored,
• Spurs domestic consumption that is largely untaxable by foreign entities,
• Strengthens national identity and soft power.

With strategic infrastructure development, policy consistency, private investment, and inclusive promotion, India can harness tourism not only as an economic tool but also as a cultural force.
By turning trade adversity into domestic opportunity, India has the chance to make tourism a core pillar of its next growth chapter.