International Tourism in India: Strategic Significance, Gaps and Vulnerabilities

Abstract

India initiated economic reforms as an aftermath of a serious foreign exchange crisis. The number and the pace of reforms have been increasing ever since. The scope of external liberalization has increased many-fold in several fields, with difficult withdrawal conditions under WTO agreements. Despite all these efforts, the Balance of Trade continues to be adverse, and so is the case with balance in the current account, if the private transfers were not supporting the same. Even then the Balance of Payment position can not be said to be satisfactory, if one takes into account the transfers in capital account and the external debt position, the latter having crossed U.S. $ 100 billion mark in the year 2002. The next round of negotiations at WTO is due soon, in which GATS, including Tourism, is likely to be an important item. International Tourism is a U.S. $ 4 trillion plus service sector, growing at an average rate of 10% per year. The importance of it for India can be realised from the fact that a 2.5% share in even one year can wipe off India’s total external debt and an increase by 0.25% share can more than off set the adverse balance of trade, and ease foreign exchange pressure on the economy. If India wishes to negotiate and open Tourism sector further to benefit from the international tourism business, it has to think strategically and gear up internally to develop appropriate physical, human resource, and other organisational infrastructure in an integrated manner, which can meet the varied needs of international tourists. Failing this, if the tourism sector is opened further for the external players, India may become only a minor tool in the value creation process in the international tourism business in India. It must prepare for playing the role of the main player, who not only helps in enhancing the value creation, but also captures and controls the value created. The major benefits otherwise would be captured by other international players. The papers points towards several strategic inadequacies, gaps and vulnerabilities that are typically observed in the process of management of tourism in the country, which need to be attended to. The paper also indicates the need for strong, scholarly, analytical support required for the purpose, which can be extended by the academicians in the country.