Spend on the world like never before

Indians are travelling abroad in significant numbers, soaking up a large part of dollars that migrant workers send back home to their relatives. Travel makes up about half the money Indians spend abroad, and outbound remittances are growing furiously relative to inflows. The spurt in international travel spending is on a low base. So, the numbers are eye-catching. But this is going to remain a high-growth category as Indians feed the global industry over the next decades. Part of the reason for the rise of the Indian traveller is the underdeveloped domestic industry that cannot cater to secular tourism, either on price or in quality.

Take travel. Indians fly to destinations abroad on foreign airlines as local carriers bulk up their fleets. Aviation hubs in the Gulf/West Asia or East Asia work to the benefit of foreign airlines for flyers to Europe and North America. Indian airlines face a tough job in clawing market share while facing high fuel costs at home that squeeze their profits. Yet, this is an obvious starting point to bring back some of the dollars Indians are spending and will continue to spend on international travel. Eventually, India should have its own aviation hub.

Then there is hospitality. The domestic industry is concentrated in established destinations that leads to overcrowding and ecological damage. Overall, the share of branded hotel rooms in India is small by international standards. Better facilities at newer destinations could convince more Indians to holiday at home. This is particularly relevant to India with its geographical diversity. Improving connectivity within the country has a direct effect on tourism infrastructure, which needs to be built in public-private partnership. India must also pitch aggressively for convention tourism that can affect both outbound and inbound travel. Be it travel or hospitality, skills shortages constrain growth of the domestic industry. These need to be addressed from the perspective of rapid job creation and gender-neutral employment.