Infrastructural Hurdles Hamper Tourism’s Futuristic Growth

India’s tourism industry has made a positive transition over the past few years. But the country could have doubled its tourism success story, if its infrastructure was in place. Anindita Chattopadhyay delves into the infrastructure lacunas that have hampered this industry

Suddenly India's tourism industry is in the pink of health with domestic, inbound and outbound tourism showing an upswing. Thanks to former tourism and culture minister Jagmohan. He successfully catapulted the also-existed industry to a major driver of the economy in the eyes of politicians. So much so that the industry was grooved in a champagne-popping mood as it saw waiving of IATT, halving of excise duty on ATF, introduction of liberal charter policy, apart from getting partial infrastructure status for the industry and abolition of Hotel Expenditure Tax (HET).

No doubt, the moves were in the right direction, but a closer look at the situation will reveal that much more needs to be done and at a much faster pace if the true potential of tourism's multiplier effect is to be harnessed. The bottleneck in the growth of inbound tourist according to industry captains is the high package cost and lack of infrastructure. While the high cost of components such as cost of air travel, visa charges, hotel tariffs, entrance fee, domestic airfare makes India an expensive destination, lack of infrastructure fails to sustain any increased growth.

A look at India's infrastructure scenario will prove the point. Our country with its sub-continental dimensions has only five international airports. That these airports lag behind international standards is an understatement.

According to Werner Heesen, general manager, Lufthansa, "The airline cannot bring in bigger aircraft despite having a capacity demand in the market because the airport infrastructure is not ready yet." Out of the 38-lakh-km of roadways in India, national highways account for only 58,000 km and the balance fall within the purview of the states. Over the past 10 years, the vehicle population has increased hundred-fold while the road length network has reportedly increased by a factor of only seven. India, today, has an estimated 98,000 rooms. The World Tourism Organisation (WTO) in its Tourism

2020 Vision, adopting our empirical rate of growth, has projected that foreign tourist arrivals to India will reach 5.09 million in 2010 and 8.90 million in 2020. The country, in that case, would need around 160,000 rooms in 2010 and 300,000 rooms in 2020. Now since many see the country reaching the five million mark in two years, we will need those rooms fast.

Room Doom

Accommodation infrastructure has witnessed the slowest growth from 8,000 rooms to 80,000 in 30 years. The availability of hotel rooms, 98,000 at present, is still only half the number required to host even a modest target of five million visitors. With just 2.8 million tourists this year, tour operators felt the crunch as they struggled to find accommodation. What India now needs is more three-star category value-for-money properties because out of around one lakh rooms, barely 25 per cent are in the mid-market category. High price of land, archaic laws of land use, complex building by-laws and absence of a single window clearance system have been the major disincentives in this sector.

"A single-window system is the only way to attract investment. Further, we have requested the tourism ministry to influence state governments to make plots available at subsidised rate to hoteliers to encourage them to build value-for-money hotels," said Rajindra Kumar, secretary, FHRAI.

Aviation Apathy

High airfare, another deterrent, is again the fallout of our civil aviation policy. Government's restrictions on the seat capacity of foreign airlines have created an imbalance in the demand supply ratio. Just 15 million seats are being used annually when India can have 34.7 million air seats on international routes.

Since demand outstrips supply, the foreign airlines do not bother to promote India in their respective countries, let alone rationalising fare structure. The fare differential from London to India compared to another place of the same distance is often to the tune of US$ 350. For instance, the cost of air travel from Europe to India is much more compared to Bangkok, although the flight time is four hours more. Airlines blame it on high operational cost as India has high landing and navigation charges. But if we open the skies, competition will increase and fares would come down. Kuala Lumpur did not charge any tax from foreign airlines for five years, which not only saw it develop into a hub, but the airlines took the initiative of promoting Malaysia in their respective countries to sell the requisite air seats. Alternately, the government could strengthen the national carriers, but one cannot see any visible interest. The cup of woe is full with high sales tax on ATF making domestic airfare dearer. A blanket cap on ATF sales tax at four per cent would have made domestic airfare reasonable, but our state governments choose to be pennywise, pound foolish.

Surface Sorrows

Tourist transport has always received a step-motherly treatment because India failed to realise that surface transport can be a preferred alternative to expensive air travel. The state governments use roadways to fill their coffers by levying inter-state taxes, but never use the money earned in maintaining roads or developing roadside amenities. The yearly road tax on tourist coaches can vary between Rs 12,000 and Rs four lakh depending on the state. Often the inter-state taxes paid are higher than the rent of vehicle hired. For instance, a Delhi-Agra-Delhi trip on a coach costs Rs 14,000 out of which 7,600 is the tax paid to the Uttar Pradesh and Delhi government.

Similarly a Delhi-Agra-Jaipur-Delhi trip which costs Rs 29,700 has a tax component of Rs 13,700. Aloke Rawat, joint secretary, surface transport, suggested a separate TV (tourist vehicle) registration series for vehicles owned by registered tourist transporters across the

country to differentiate them from other registered tourist transports that are being used for other purposes. However, it fell through at the Transport Development Council. "Surprisingly, the Indian government is ready to have free trade with SAARC countries, but cannot open inter-state borders to do away with the trouble of stopping at several entry and exit points and paying taxes," remarked Sarabjit Singh, president, ITTA.

Way Ahead

In the late 70s, when China decided to open its economy to the world, tourism was included as an integral part of its economic development strategy. The result of such a strategy was the systematic and coordinated establishment of modern airports, highways, hotels and motels, shopping malls, entertainment centres, eateries dovetailing with industrial and business development. According to a WTO report, China today has more than 950,000.

hotel rooms out of which Beijing alone accounts for around 90,000 rooms. It is this planned and integrated development within a specified time frame that has enabled China to successfully bid for hosting the 2008 Olympics. Now that India plans to bid for the 2016 Olympics, the country needs to marry national priority with systematic planning and implementation to make progress faster.

Yes, the former NDA government had taken certain positive initiatives - the golden quadrangle to create expressways joining the four metros and the privatisation of modernisation of airports. The highways from Delhi to Agra and Jaipur bear testimony to what can be accomplished if there is the requisite will. If the Congress government wants to keep its promise of creating one crore jobs, tourism can be the best bet. Forget red tapism and bring in a single window clearance to rope in private investors and expedite reforms. After all, the more the number of foreign tourists, the more the inflow of money, the more jobs created and a more shining India.