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Forget tariffs—foreign tourists pay in forex, smile in return.


Date: 27-05-2025
Subject: Forget tariffs—foreign tourists pay in forex, smile in return
Why does a pharmaceutical consignment destined for the US qualify as a strategic export, but the pounds a British tourist spends on a holiday in India hardly merit a mention? This question becomes even more critical given the current scenario of escalating tariffs, unstable supply chains and freight costs. Today, more than ever, we need to examine our export basket and help grow one of its most under-leveraged aspects: inbound tourism.

Why are we so focused on trade deficits driven by manufactured goods when we could use our service sector to offset the deficit? Every dollar an international visitor spends on hotels, airlines, guides, local crafts and food is hard forex credited to balance of payment. It requires no containers, no FTAs and no port clearances, and to double its pace, all it needs is a serious policy focus.

Inbound tourism is one of the few sectors that can deliver forex at scale. Tourists don't face tariffs. Their spending isn't subject to retaliatory duties. Their arrival is not subject to WTO rulings. In a global economy where trade flows are increasingly hostage to political volatility, tourism offers India a rare export that is decentralised and largely geopolitically agnostic.

On the demand side, we must focus on:

Marketing well India has one the best tourism products in the world. It's just that not enough people know about it. GoI should spend at least ₹1,000 cr ($120 mn) to market it effectively using social media in a kind of upgradation of the old 2002 Incredible !ndia campaign for a new generation and demographic.

Just like diplomats promote our pharmaceutical, IT and engineering exports abroad, they should promote tourism to India. Tea estates of West Bengal and Assam, heritage palaces of Rajasthan, and wellness tourism in Kerala need to be pushed like pharmaceuticals and automobiles.

Simplifying visas e-Visas should be issued in three steps. The underlying tech needs to be upgraded, the process simplified and the user interface improved. Data requested should be relevant and minimal.

Meanwhile, on the supply side:

High-end trains India needs more high-quality trains linking tourism hubs - heritage cities, wildlife reserves and coastal zones. The Vande Bharat network needs to connect emerging tourist destinations.

Widen the appeal spread Tourism could deliver dollars deep into rural economies and aspirational districts. We could reduce over-tourism in certain parts and expand our tourism footprint.

For example, we could focus on growing tourism to areas that have lesser-known monuments that have been awarded the UN Blue Shield plaque, or boast of food items that have received a GI tag to protect and preserve their authenticity and that of the communities that make them - be it Darjeeling tea or Kannauj perfume.

Boost soft power Tourism has a big role to play in growing our soft power. This cultural richness is our competitive advantage. No trade pact can replicate it. Good storytelling and better infrastructure can help leverage it.

When a tourist spends $2,000 in India, it reverberates across the economy. This hard-currency sector creates lakhs of jobs and drives demand from over 60 countries. To grow exponentially, all it needs is a focus on demand creation and 'ease of travel', offering them a safe, clean environment, and encouraging citizens to treat them respectfully.

It is time for inbound tourism to move from being a small line item for the tourism ministry to a whole-of-government approach. Ministries of finance, external affairs, home, civil aviation, roads and railways must recognise it as a fast-scaling, tariff-proof export engine that serves India's twin goals of forex security and inclusive job creation.

Source Name : Economic Times

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