Travel South Asia: Indias tourism connectivity with the region – Brookings Institution

Introduction

Tourism is an important metric of a countrys soft power potential, marked by an increase in movement of people and enabling people-to-people connectivity. Over the last two decades, South Asia has emerged as an attractive tourist destination due to its natural and cultural diversity, and price competitiveness.[2] The region is home to tourism-based economies such as Bhutan, Maldives, Nepal, and Sri Lanka that attract high spending per traveller.[3] In 2019, the World Economic Forums Travel and Tourism Competitiveness Index (TTCI) ranked South Asia as the most improved region since 2017.[4] Within this, India has shown the greatest improvement in rank among the top 25% countries, from 40th in 2017 to 34th in 2019.

India accounts for a majority of South Asias travel and tourism gross domestic product (GDP) and has also been the preferred destination for tourists from within the region. In the last decade, India has witnessed an increase in the share of South Asian tourist arrivals. While geographic proximity and cultural affiliations are the underlying factors for high cross-border mobility, the market size and the tourists spending capacity have also played an important role. Additionally, tourist spill-overs from India to the rest of the region contribute significantly to the regional tourism economy.

This policy brief highlights tourism connectivity between India and its neighbours, capturing the tourism trends within South Asia. Given Chinas increasing tourism imports and a growing presence in the region, the brief also offers a comparative analysis of reciprocal tourism trends between South Asia and China.

Methodology

The United Nations World Tourism Organization (UNWTO) defines tourism as the activities of persons traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes.[5] Along similar lines, the Ministry of Tourism (MoT), Government of India, defines a foreign tourist as a person visiting India on a foreign passport, staying at least twenty-four hours in the country, the purpose of whose journey can be classified under one of the following headings: (a) leisure (recreation, holiday, health, study, religion, and support), and; (b) business, family mission, meeting.[6] The definition extends to transit passengers who stay overnight in India and are counted as tourists.

The data on inbound and outbound flows is from the Ministry of Tourisms India Tourism Statistics Reports and the United Nations World Tourism Organizations (UNWTO) e-library. The inbound statistics used in Figures 1 and 2 are equivalent to outbound tourism data from each neighbouring country to India. Qualitative inputs were collected through informal interviews with officials from the Ministry of Tourism and the Bureau of Immigration in India to understand the data collection methodology and various steps taken to promote tourism.

It should be noted that the Ministry of Tourism changed its methodology in 2014, standardising it with the UNWTO methodology, and added Non-Resident Indians (NRIs) to the Foreign Tourist Arrivals (FTA) category, which together formed the International Tourist Arrivals (ITA).[7] For the purpose of analysis and standardisation of data with the preceding years, Figures 1, 2 and 5 only focus on the FTAs. The mode of arrival data in Figure 4 is from the India Tourism Statistics reports, published annually between 2010 and 2019 by the Ministry of Tourism.

This policy brief covers tourism data between India and seven of its neighbouring countries: Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan, and Sri Lanka, which are collectively referred to as South Asia or N7.

Growing share of tourist arrivals from South Asia to India

Figure 1

While India declared tourism as an industry in 1982, it adopted the National Tourism Policy two decades later in 2002.[8] Supporting this, the Ministry of Tourism launched the Incredible India campaign in 2002 targeting increased tourist inflows. The impact of these developments is seen since 2003, when India started witnessing a linear growth in the total number of foreign tourist arrivals (FTAs) (Figure 1). Despite this, Indias share of global tourist arrivals remains abysmally low at 1.2% (2018).[9]

However, India is growing as an attractive tourist destination for travellers from the South Asian region. Tourists from the neighbourhood account for roughly a third of the total FTAs (Figure 1) in India. In 2018, South Asia accounted for the highest percentage share of tourist arrivals (29%) among all the regions, followed by Western Europe (21%).[10]

From 2003 to 2013, the share of South Asian tourist arrivals dipped from 23.8% to 16.9%. This declining trend registered a shift in 2014, when the share increased for the first time in more than ten years, to 21.6%. Between 2003-2013, the cumulative annual growth rate (CAGR) of total FTAs was 10%, which increased to 22% between 2013-17. Much of this shift is attributed to the rise in the number of Bangladeshi tourists.

How tweaking rules can have a big impact: The case of Bangladesh

Figure 2

A country-wise breakdown of FTAs in India (Figure 2) reveals that the top four South Asian countries for inbound foreign tourists are Bangladesh, Sri Lanka, Nepal, and Afghanistan.

For years, Bangladesh has featured in Indias list of top ten tourist source countries due to its proximity and cultural linkages. However, figure 2 shows that there has been a sudden surge in the number of Bangladeshi tourist arrivals from 2014. Between 2003-2014, the growth of Bangladeshi tourist arrivals was 1%, whereas, in 2014, the arrival of Bangladeshi tourists to India increased by 80%. Since then, the number been growing at an average annual rate of 40%. In 2018, one in every four tourists from South Asia arriving in India was from Bangladesh.

A possible explanation for this upward trend could be the liberalisation of Revised Travel Arrangement (RTA) between India and Bangladesh in 2013 and 2018. The 2013 revision brought certain changes to the provisions of the 1972 Agreement on Passport and Visa System, to remove difficulties faced by the nationals of either country in obtaining a visa.[11] Some key revisions include extending the short-term visa on medical grounds for a year, allowing up to three accompanying attendants and similar extension facility, and relaxation in the issuance of multiple-entry permits. India and Bangladesh further liberalised the RTA in 2018, to include longer employment time, student visas and five-year multiple-entry permit for the elderly and freedom fighters. [12]

In 2013 and 2018, India liberalised the Revised Travel Arrangement with Bangladesh, resulting in an average 40% year-on-year growth of tourist arrivals.

Interviews with stakeholders revealed that as a result of ease of obtaining a visa, several informal cross-border movements have been converted to formal movements. This can be exemplified by tracking movement through the formal border-crossings such as the Integrated Check Posts (ICPs) or Land Customs Stations (LCS). For example, the total incoming and outgoing passenger movement from ICP Agartala increased by 51% in 2014-15 over the previous year, and movement through Petrapole has doubled in the last five years (2014-2019).[13] The increase in registered movements also reflects the efficiency of border infrastructure, including digitisation of immigration processes.

A detailed 2018 survey on Study on Visits of Nationals of Bangladesh in India by the Indian Institute of Tourism & Travel Management (IITTM), reveals the profile, purpose and expenditure pattern of tourists and visitors from Bangladesh.[14] It found that while a majority of the tourists visited India for religious and leisure purpose 37% and 26% respectively about 14% of Bangladeshi nationals visited India for medical treatment.

Owing to the cumbersome procedure or inability to obtain a medical visa, some of them were found to have entered India through regular tourist visas. Some Bangladeshi tourists were also repeat visitors to India, with about 24% visiting India six times or more for different purposes. Furthermore, the affordability of India is an important factor for Bangladeshi tourists. The survey shows that the majority of Bangladeshi tourists spend approximately INR 8,000 (approx. USD 115) on a 5-9 day visit to India, with many dependent on public buses for transportation within India.

In the last two years, India also focused on improving visa application processes, which could further explain the rise in Bangladeshi tourist arrivals. In 2018, India inaugurated a new integrated state-of-the-art Indian Visa Application Centre (IVAC) in Dhaka its largest visa centre in the world. Additionally, the Indian High Commissioner to Bangladesh also announced the withdrawal of the appointment system for submission of visa applications.[15]

Visa barriers to regional tourism

Indias bilateral visa policies and the resultant degree of ease of access for tourists have an instrumental bearing on the number of FTAs. Within South Asia, agreements with Nepal and Bhutan exempt all nationals of these countries from requiring a visa to travel to India and vice-versa, with only minimal exceptions. Similarly, Maldivian nationals travelling to India for tourism do not need a prior visa if their period of stay in India is less than 90 days in the preceding six months.

We developed an openness index, tracking the ease of access to visas for nationals from South Asian countries seeking to travel to other countries in the region (Figure 3). The index shows that Bhutan, Maldives, and Sri Lanka have the most open tourist visa policies towards citizens of the other South Asian countries. India ranks fifth in travel openness towards South Asia, with only three countries (Nepal, Bhutan and Maldives), eligible for visa-free travel to India. By contrast, Sri Lanka offers visa-on-arrival or e-Travel Authorisation to all South Asian countries and maintains an open border with the Maldives.

Figure 3

Transportation matters: Mode of arrival

Figure 4

The mode of arrival data in figure 4 is derived from the record of all passports stamped by the Bureau of Immigration at recognised ports of entry. Qualitative inputs reveal that not all land border arrivals from Nepal are stamped, as seen in figure 3, where the majority of the reported arrivals from countries sharing a land border with India, such as Nepal and Bhutan, are via air. Informal crossings are also frequent, especially on the India-Nepal border. Furthermore, it is interesting to note that the number of road arrivals from Sri Lanka to India has been increasing. This is possibly due to religious tourism along the Buddhist circuit, with Sri Lankan citizens crossing overland into India after visiting Nepal.

Apart from serving as an indicator of the possible rise in the income profile of Indias inbound tourists from South Asia with more tourists opting for air travel the data may also reflect improvement of Indias infrastructural connectivity with its South Asian neighbours. In the last few years, there has been an increase in investments on cross-border connectivity infrastructure such as Integrated Check Posts (ICPs), airports and sea connectivity. In January 2020, for example, India and Nepal inaugurated the ICP at Jogbani-Biratnagar to facilitate trade and peoples movement. This is the second ICP on the India-Nepal border the first one was built at Raxaul-Birgunj in 2018.[16]

Additionally, in 2018 India and Nepal agreed to open four new cross-border air routes connecting the provinces of Nepal directly to India and Bangladesh.[17] India and Sri Lanka also expanded flight connectivity with the resumption of flights to Jaffna from Chennai after more than four decades. Interestingly, to support such air connectivity, the Ministry of Civil Aviation, India, waived the 5/20 rule, requiring five years of experience and a minimum of 20 flights for an airline to operate international flights.[18] In March 2019, India and Bangladesh commenced a passenger cruise linking Kolkata and Dhaka as part of the Agreements for Enhancing Inland and Coastal Waterways Connectivity. [19]

Ni Hao! South Asia welcomes Chinese tourists

Figure 5:

Tourism is a lucrative source of foreign exchange earnings. As per the World Travel and Tourism Councils (WTTC), the sector contributed US$ 234 Billion or 6.6% to South Asias total GDP in 2019.[20] There was a 4.5% travel and tourism GDP growth vis-a-vis the 5% real GDP growth in the region. While foreign tourist arrivals to the region have increased over the years, there has also been a significant increase in the contribution of tourists from the two largest economies: India and China.

A comparison of Indian and Chinese tourist arrivals in four South Asian countries Bangladesh, Maldives, Nepal and Sri Lanka reveals that while more Indian tourists visit South Asia, the last decade has witnessed an unprecedented rise in the number of Chinese tourists, approximately by 753% (Figure 5). In 2007, few Chinese tourists were visiting South Asia, concentrated mainly in the Maldives and Nepal (42% and 32%, respectively). In the same year, the number of Indian tourists was significantly more in Bangladesh, Nepal, and Sri Lanka (Figure 5).

A decade later, the 2018 figures reflect a rather different reality, with a phenomenal rise in the number of Chinese tourists to the Maldives, Sri Lanka, and Nepal. Between 2007 and 2018, Chinese tourist arrivals rose by 687% in the Maldives, and 462% in Nepal. Sri Lanka registered the highest growth in tourist arrivals from China, from just about ten thousand in 2007 to almost two hundred and sixty thousand in 2018 (a rise of 2486%).

According to the UNWTO and the Chinese Tourism Academy, China has been the worlds largest tourism source market since 2012. The number of outbound travel departures increased from 4.5 million in 2000 to 150 million in 2018, with an average annual double-digit growth of 16%.[21] However, it is reported that the market is still in its infancy. Since only 7% of Chinese citizens currently own a passport, the number of trips could surge to over 400 million by 2030.[22]

This enormous expansion of the Chinese outbound tourism market can be attributed to reasons such as increased air connectivity and a rising middle-class with growing disposable income. Between 1990 and 2016, the number of international air travellers has increased from just one to 52 million.[23] Furthermore, a profile segmentation of Chinese outbound tourists shows that women and millennials (aged between 15-34 years) dominate the market with respectively 53% and 55% of the total outbound tourist share. [24]

Between 2007 and 2018, the number of Chinese tourist arrivals has increased five-fold in Nepal, seven-fold in the Maldives, and twenty-five-fold in Sri Lanka.

Countries in South Asia reportedly gain more from tourism exports to China than India. This is reflected in the average per capita spending capacity of Chinese and Indian tourists in 2018, at approximately US$ 1850 and US$ 960, respectively.[25] In the same year, the total Chinese tourist expenditure amounted to US$ 277 billion, registering a 5% increase from the previous year. By comparison, Indias total international tourist expenditure was US$ 26 billion after a 9% year-on-year increase.[26]

Chinas increasing investments in tourism and allied sectors in South Asia could have possibly led to the rise in Chinese tourist arrivals. For instance, in the Maldives, China has invested significantly in infrastructure, housing, hotels and airlines.[27] In 2011, the Sri Lankan government sold a strategically important site, the Colombo beachfront property, to a Hong-Kong based holding company for USD 125 million.[28] Nepal and China have established direct flights from Kathmandu to Beijing through Himalayan Airlines, a Nepal-China joint venture.[29] Furthermore, Chinas Northwest Civil Aviation Construction Group, with financial assistance from the Asian Development Bank (ADB), is constructing the new Gautam Buddha International Airport.[30] During his 2019 visit to Nepal, Chinas President Xi Jinping noted that Nepal is the first South Asian country to be designated an approved destination for Chinese tourists and that there now are about sixty weekly flights connecting both countries.[31]

Conclusion

India has been the preferred short-haul destination for tourists from its neighbourhood. Tourists visit India not only for leisure and medical reasons, but also use the country for transit to other regions. Bilaterally, there have been improvements in visa policies, for example, the relaxation of the India-Bangladesh visa policy in 2013 and with the Maldives in 2019. However, there are still significant challenges towards promoting free and open intra-regional tourism such as visa-openness, gaps in cross-border infrastructure, etc. China, on the other hand, has been increasing its presence in the region, with a growth of 753% in the last decade (2007-2018). It has also made significant investments in South Asias tourism and hospitality sectors.

Recently, the COVID-19 pandemic has presented unforeseen challenges to global tourism. With geography gaining significance and the importance of shorter distances becoming more pronounced, regional tourism is likely to grow. Governments must thus pivot to focus considerably more attention on regional tourism through investments in infrastructure and services, particularly digitisation to reduce human transactions. India, in particular, will have to leverage the wide range of cultural similarities with its neighbours such as the regional Buddhist trail and pilgrimage, etc. Such a push would also contribute locally through employment and revenue generation from foreign exchange earnings.

Policy Recommendations

Several steps can be taken to ensure a seamless flow of tourists in India and its neighbourhood: