Tourism can grow four times by 2022: finance ministry

Investment in infra, tweaking of tax laws could boost industry

India’s tourism industry, virtually on par with the country’s software industry at $117 billion, can grow four times to over $400 billion by 2022 with some investment in infrastructure and tweaking of tax laws, a finance ministry working paper has said.

“This sector is a goldmine of opportunity which has not really been tapped. If tapped well, it can lead to higher and inclusive growth,” the working paper authored by senior economist HAC Prasad said.

India’s share in world tourist inflows was 0.64 per cent in 2011 (ranked 38). In comparison, USA was pegged at 11.3 and China at 4.7 per cent respectively. But India’s share in world tourism expenditure is pitched relatively higher at 1.61 per cent (rank 17) implying that foreign tourists spend relatively more in India, the paper co-authored by R Sathish SalamShyamsunder Singh said.

The major issue that came in the way of pushing tourism sector in the country was multiplicity of taxes faced by the hospitality industry. According to the paper, state taxes like luxury tax, value added tax, licence fees on room rent, restaurants, banquets, bars besides service tax are levied separately on all these heads.

“While the goods and services tax (GST) could ease the situation, there is a need to address this issue of multiple taxes to help this potential sector,” the paper said implying the taxes are major impediment to its growth.

At present, India attracts 6 million tourists and has a fixed target of 10 million in a year. It said that a large country like India attracted only 6.7 million foreign tourists during 2012-13.

According to the paper, better tourism infrastructure using the PPP route and addressing issues like high luxury tax on hotels by state governments is necessary. Even the MGNREGA scheme can be used for developing permanent assets like tourism infrastructure, it said.

Tourism can grow four times by 2022: finance ministry