India’s rich cultural heritage, amazing natural beauty, and magnificent monuments attract a large number of tourists from across the world. The country offers a diverse portfolio of niche tourism products like eco-tourism, rural tourism, religious attractions, medical/wellness tourism that involves Ayurvedic & spa therapies.
As a result, the Indian tourism industry is growing at a fast pace and is one of the key growth drivers among the service sectors in India. Based on most recent data from 2017, the industry’s total contribution to GDP was USD 91.3 billion (or 9.4%) and it generated 4.16 crore jobs in the country.
Broadly tourism and hospitality industry includes the following:
Factors driving India’s tourism industry:
- Growing domestic demand: Increasing wealth & affluence has been driving domestic expenditure on tourism
- Improving Infrastructure: Capital investment in travel & tourism has been rapidly growing, reaching 2,70,610 crore in 2017
- Government Policies: Along with the launch of Incredible India 2.0 in 2018, theme based tourism circuits are being developed. 100% FDI has already been allowed in the tourism & hospitality industry
Notable Industry Trends & Initiatives:
- India’s image as the seat of spiritualism and widespread practice of ayurveda, yoga, and naturopathy makes it a hot favourite amongst many international tourists
- E-tourist visa facility (launched in Nov 2014), visa issued electronically, which allows tourists and short term travellers to get an Indian visa quickly and easily on-line, is now available for citizens of 166 countries as of Dec 2018. In 2018, 2.37 million foreign tourists visited India via e-tourist visa, 0.44 million tourists had used the facility in 2015
- Tourist police task force has been established by various state Governments for ensuring safety and security of tourists.
- Central Government has launched the “Pilgrimage Rejuvenation and Spiritual Augmentation Drive” to enhance facilities and boost infrastructure at pilgrimage centres across India
- Under the “Swadesh Darshan” scheme 13 thematic circuits like Himalayan circuit, Buddhist circuit, wildlife circuit etc. have been identified for development. Under budget 2017, Rs.952 crore has been allocated for the same.
- In Budget 2019, Rs 2,189 crore was allocated to the Tourism Ministry, a jump of 3.5% compared to the previous
- In September 2018, first ever India Tourism Mart (ITM 2018) was organised – it was a three day event in which all the stakeholders of the industry came together to interact and transact business
Investing in Hospitality & Tourism Stocks
As India increasingly becomes a tourist favourite, you can benefit from this change by investing in the Incredible India smallcase. This smallcase is an intelligently weighted portfolio that includes the hospitality, travel, and tourism stocks like Indian Hotels, Delta Corp, EIH Ltd. (Oberoi Group), etc.
As of October 2019, the Incredible India smallcase has given 1Y returns of 8%, comfortably outperforming the Nifty Midcap returns of -8%! The smallcase has a CAGR of 12%, and additional details can be found on the smallcase page.