Tourism sector needs major revival, ’Incredible India 3.0’, but receives no discernable benefits in Budget

New Delhi: Some good news first: India has increased its budgetary allocation towards 'Incredible India' for international marketing campaigns this fiscal from ₹3 crore proposed earlier this year in the Interim Budget. But this figure is just a sixth of the spending it has earmarked for domestic tourism marketing. Just ₹33 crore has been earmarked for overseas promotion and publicity marketing abroad where international travellers can see advertisements of India in their own country and plan their travel here. But as much as ₹177 crore has been given for domestic tourism promotion and marketing publicity, according to the Budget documents released by the government today. 

In addition, the country's tourism industry, which was expecting a huge shot in the arm with the newly-elected government, received just two ‘disappointing’ budgetary announcements. One said four locations in Bihar would be redeveloped and support to be provided to Odisha and another said inbound shipping companies operating domestic tourist cruises here would get tax benefits in the form of a simpler tax regime. 

The sector was hoping to achieve its vision for an 'Incredible India 3.0' where it could capitalise on the current positive perception of India post-covid.

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The overall allocations remained flat with the government earmarking about ₹2,478 crore for the tourism ministry, similar to ₹2,400 crore allocated last year in FY24, according to budgetary documents. Actual expenditure last year was ₹1,692 crore. 

Of the allocated ₹2,478 crore, ₹2,080 crore has been kept aside for tourism infrastructure development and a large chunk of this, ₹1,750 crore to develop tourist circuits around specific themes only under the Swadesh Darshan scheme. A sum of ₹240 crore has been earmarked for its Pilgrimage Rejuvenation and Spiritual Augmentation Drive, or PRASAD, scheme. Swadesh Darshan was launched in 2014-15 for integrated development of some theme-based circuits, as sustainable and responsible tourism destinations within India. That same year PRASAD was launched.

Domestic Promotion

The figures for domestic promotion have more than doubled this fiscal when compared to last year's allocations of ₹75 crore. Actual expenditure that year exceeded ₹75 crore and reached ₹95 crore. On the other hand, the funds for international overseas promotions have been declining each year. About ₹100 crore was spent for it in FY24 (from an allocated ₹167 crore). The budget for it was much higher just three years ago in FY22 when it stood at ₹524 crore. It then fell to ₹341 crore in FY23. The Incredible India campaign was first seen in 2002 as a way to promote India as a destination.   

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In her budget speech today, finance minister Nirmala Sitharaman said efforts were being made to position India as a global tourism destination to unlock economic opportunities. However, she proceeded to make no announcements to buttress the same. Instead, the government proposed the development of religious tourist destinations like Vishnupada temple at Gaya and Mahabodhi temples at Bodhgaya in Bihar. The two temple complexes would be developed on the lines of the Kashi Vishwanath corridor to become similar tourist destinations. In the same state, Rajgir would also be developed and so would Nalanda. The other announcement made was for Odisha which would be provided assistance for developing its tourism. 

Inbound tourist businesses, those focused on bringing tourists from around the world into India, were disappointed with the budget. "Nothing was announced for inbound tourism. Any new international cruise liner coming into India and doing domestic business would be given a tax waiver but what about Indian companies that were already operating here? We had given many recommendations, but have been totally ignored or not taken up. The government has made it a clear objective to give a boost to employment generation. However, this being one of the largest employment generating sectors, why were no concrete announcements made for it?" asked Rajiv Mehra, president of the IATO, a body of inbound tour operators in the country.

"There is no vision for tourism if we look at what the government has announced for Bihar and Odisha. The Centre said nothing about any additional allocation of funds, or incentives for tour operators. Tourism is still not treated as an industry and this is critical when we look at our neighbours like Thailand, Malaysia, Vietnam and others which treat tourism as a priority item. Domestic tourism brings in foreign exchange receipts for the country. While they said they would make India an international tourist destination, they mainly only spoke about developing domestic temples. When domestic tourism grows, money only exchanges hands locally. But if international inbound tourism into India picks up, it brings additional foreign exchange receipts," added Subhash Goyal, chairperson of STIC Travel Group of companies.

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Additionally, international cruise companies will be incentivised to start domestic tours within India by way of tax benefits. But this, Goyal said, made little sense, as it potentially disincentivised existing domestic operators. "There is no benefit for domestic players but if they register their ship elsewhere in any other country, then they can take the benefit out of it. This is odd," he added. 

"To achieve Incredible India 3.0, India should urgently capitalise on the current positive perception post-covid, driven by its economic performance. Leveraging high demand in key markets such as the UK, France, Germany, and US, India can stand out against competition from Vietnam and Thailand through a focused marketing strategy. This includes bringing back successful campaigns like Incredible India and engaging agencies in top source markets where the travellers come to India from. But with the current ₹33 crore allocation, we would not be able to gain traction. A country of our size should have at least ₹500 crore set aside for such activities," said Dipak Deva, managing director, Travel Corp. India Ltd, a Fairfax company.