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Introduction

India’s tourism sector, despite its diverse heritage, ranks significantly lower in global competitiveness compared to smaller peers. According to the WEF Travel and Tourism Development Index, while India has high natural resources, it suffers from poor service infrastructure and regulatory inefficiencies, limiting its global share.

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Regulatory Barriers Constraining Growth

• Complex Tax Structures: High and multiple tax layers under GST, especially for luxury hotels, make India an expensive destination for international travelers.
  Eg: Tax on high-end hotels in India can reach 18-28%, significantly higher than the 5-10% in rival markets like Thailand.
• Archaic Licensing Norms: Tourism businesses face a “permit raj,” requiring numerous clearances from multiple departments, which delays projects and increases operational costs.
  Eg: Typical hotel project in India requires over 100 clearances, compared to fewer than 10 in Singapore.
• Visa and Entry Barriers: Frequent changes in e-visa policies and high reciprocity fees deter spontaneous travelers and long-haul tourists.
  Eg:Administrative delays in processing visas for key markets have historically diverted tourist traffic to Southeast Asian neighbors.
• Infrastructure Governance Gaps: Fragmented oversight between Central, State, and Local bodies leads to poor maintenance of site connectivity and hygiene standards.
  Eg: Lack of unified “last-mile” transport regulations often leaves tourists vulnerable to unregulated and unsafe local transport.

Reforms to Improve Competitiveness

• Granting Industry Status: Recognizing tourism as an “industry” nationwide to allow businesses access to cheaper credit, subsidized utilities, and tax incentives.
• Single Window Clearance: Implementing a digital, time-bound approval system to streamline hospitality and adventure tourism projects.
  Eg: A “National Tourism Board” could act as a nodal agency to bypass bureaucratic silos.
• Rationalizing GST Rates: Standardizing GST across the hospitality sector to a competitive 12% to align with global tourism hubs.
  Eg: A “One Nation, One Tourism Tax” to simplify the cost structure for tour operators.
• Skill Development Integration: Creating specialized “Tourism Cadres” and certifying local guides under the ‘Hunar Se Rozgar’ scheme to enhance service quality.
  Eg: The ‘Dekho Apna Desh’ initiative aims to improve visitor experience through better-trained frontline personnel.

Conclusion

Unlocking India’s tourism potential requires transitioning from a “restrictive” to a “facilitative” regulatory mindset. By integrating the ‘Whole-of-Government’ approach and leveraging the G20 tourism track momentum, India can modernize its infrastructure and branding. This will ensure that tourism becomes a primary driver for the $5 trillion economy goal while preserving cultural integrity.

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