Contents
Author: Ravi
Date: 2019-01-10T10:41:55.331076+00:00

TOURISM INDUSTRY

August 2018

© THE INSTITUTE OF COMPANY SECRETARIES OF INDIA

Disclaimer

Due care has been taken to avoid errors or omissions in this publication. In spite of this, er ors may
still persist. Any mistake, er or or discrepancy if noted, may be brought to the notice of the Institute,
which shal be taken care of in next edition.

The Institute shall not be responsible for any loss or damage resulting from any action taken on the
basis of the contents of this publication. To avoid any doubt, it is suggested that the reader should
cross-check the contents of this publication with original Government notifications.

This industry specific research report is for wide circulation among experts to receive valuable
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to research@icsi.edu.

The Section 3, “Legal Framework” is indicative only.

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ii

PREFACE

In the liberalized economic policy regime, the corporate sector has been assigned a major
role as the driver of growth and development of the Indian economy. This has resulted
in a number of changes, especially in the regulatory framework applicable to specific
industry sectors. As an economy is consist of different industries like agriculture, service,
engineering, manufacturing etc., it provides impetus to the economy i.e. employment
generation, production of goods and services, income distribution in the whole economy.

With the intent to further enhance the competitiveness of India’s services sector and
to boost productivity with the creation of new employment opportunities, the Central

Government has focused attention on 12 sectors in the economy as ‘Champion Sectors’

i.e., IT & ITeS, Tourism and Hospitality, Financial, Accounting and Finance, Transport and

Logistics, Construction and Related Engineering, Communication, Education, Medical

Value Travel, Audio Visual, Legal and Environmental.

As part of its support to government’s policy initiatives, the Institute has started an initiative by
projecting Company Secretary as ‘Corporate Saviour’- a person who can be relied upon
by stakeholders i.e., Corporates, Promoters, Shareholders, Government and Regulators.

With this basic objective, the institute has initiated the process of developing industry
specific knowledge through research, creating awareness among the members about
the contribution the Company Secretary can make in specific industry, capacity building
of members in the specific industry, securing recognitions for members in specific industry
sector, and sensitisation of regulatory authorities about the contribution the Company

Secretaries can make in specific industry.

For conducting the detailed analysis in a structured manner, a format is designed with
four sections, Section-I covering the industry profile, Section-II Business Scenario, Section-III
legal framework and Section-IV Contribution of Company Secretary in employment and
in practice. The research publications in all the industry sector are based on exploratory
research.

I wish to express my sincere thanks and gratitude to CS Ahalada Rao V, Vice-President, the

ICSI for his efforts in guiding and finalizing industry specific publications.

I also appreciate Dr. Prasant Sarangi, Director (Research), and Dr. Tapas Kumar Roy-

Assistant Director, the ICSI-Research Cell for doing in-depth study of Tourism Industry and
iii
bringing out this research publication, under the guidance of CS Sonia Baijal, Director,

Professional Development, Prospective Planning and Studies and Dr. S.K. Dixit, Mentor,

Research Cel .

I am sure this research publication will prove to be of immense value to professionals,
corporates and researchers. The research is an ongoing process, and I welcome the
readers to give suggestions to make this research publication more comprehensive.

I wish all the readers a happy reading

New Delhi

CS Makarand Lele

Date: August 23, 2018

President

The Institute of Company Secretaries of India
iv

TABLE OF CONTENTS

Section No. Title of the Section / Sub Topics

Page Number

1

Introduction

1

1.1 Introduction

1

1.2 SWOT Analysis

3

1.3 Types of Investment

7

1.4. Tourism Finance Corporation of India (TFCI)

10

1.5 Foreign Direct Investment in Indian Tourism Industry

12

1.6 Types of Tourism

13

2

Business Scenario

15

2.1 History

15

2.2 Geographic Scenario

15

2.3 The Economic Scenario

22

2.4 Government Initiatives

32

2.5 Comprehensive Risk Management System

34

2.6 Tourism Policy in India

36

2.7 Road Ahead

40

3

Legal Framework

41

3.1 Legal Framework

41

3.2 Specific Laws Applicable to Travel & Tourism Industry

42

3.3 General Laws Applicable to Travel & Tourism Industry

48

3.4 Recent Initiative of Ministry of Tourism and the

50

Outcome thereon

4

Contribution of Company Secretary

52

4.1 Primary Role

53
v

4.2 Opportunities of Company Secretary (in Practice) in

54

Global Legal Platform with Reference to Tourism Industry

4.3 Role of Company Secretary At Global Platform

58

(General)

4.4 Suggestions to Ministry of Tourism (MOT) to Boost

59

Indian Tourism

4.5 Conclusion

62

Bibliography

64

Annexure-1

65

Annexure-2

72
vi

1

SECTION 1

INTRODUCTION

“Out of the future that is not yet, into the present that is just beginning, back to the
past that no longer is” – St. Augustine1

1.1 INTRODUCTION

Tourism is an important socio-economic activity. It provides enormous scope for economic
development of a particular area. According to Ziffer (1989), “Tourism involves travelling
to relatively undisturbed or uncontaminated natural areas with the specific object of
studying, admiring and enjoying the scenery and its wild plants and animals, as well as
any existing cultural aspects (both past and present) found in these areas.”

In India, temple towns, historical monuments and sea beaches were traditionally sought
out as tourist attractions. But now the fabric of tourism is changing rapidly as nature,
heritage, and recreational destinations are gaining more importance. In this background,
eco-tourism has of late become a top attraction for the tourists.

The importance of tourism to economic development has been recognized widely due
to its contribution to the balance of payments, GDP and employment. In last few years,

Indian tourism industry has been growing at a rapid pace and it has vast potential for
generating employment and earning large amount of foreign exchange.

Tourism activities are considered to be one of the major sources of economic growth. It
can be regarded as a mechanism of generating employment as wel as income in both
formal and informal sectors (Khalil, 2007). Travel and tourism is the world’s largest industry
and job creator across national and regional economies (Aliquah, 2010). The speedy
growth of tourism causes an increase of household incomes and government revenues
through multiplier effects, improvements in the balance of payments, and growth of the
tourism industry itself. (Kareishan, 2010).

Travel and tourism has not only become one of the world’s largest industry but also keeps
growing consistently every year (Gupta and Gupta, 2007). The international tourist arrivals
have shown an uninterrupted growth. As per the data, the number of FTAs in January 2018
was 1.06 million, compared to 900,000 in January 2017 and 800,000 in January 2016.

1. Karen A. Ziffer-Ecotourism

1

2

TOURISM INDUSTRY

The international tourism receipts have increased from US$ 475.3 million in the year 1990
to US$ 2311.0 million in the year 2016. Tourism industry is contributing 6.23 percent in
the GDP of the country (WTO, 2010). India was ranked eleventh in the Asia pacific region
with respect to international tourist arrivals and 40th overall in the year 2010 (WTO, 2010).

It is expected to be the second largest employer in the world by 2019 (WTTC, 2009).

Indian tourism industry is growing and it has vast potential for generating employment and
earning a large amount of foreign exchange.

Tourism is a major engine of economic growth and an important source of employment

& foreign exchange earnings in many countries including India. It has great capacity to
create large-scale employment of diverse kinds – from the most specialized to the unskilled,
and hence can play a major role in the creation of additional employment opportunities. It
can also play an important role in achieving growth with equity and sustainability.

The ways how the industry works for Economic Development is represented through the
fol owing diagram :

ATTRACTIONS

Figure-1: Tourism as an Economic and Commercial Activity a Flow Chart

The Ministry of Tourism is the nodal agency for the formulation of national policies and
programmes and for the coordination of activities of various Central Government

Agencies, State Governments/UTs and the Private Sector for the development and
promotion of tourism in the country.

Therefore, we can start with an analysis of definitions and statistics. Subsequently, we will
deal with:

SECTION 1 – INTRODUCTION

3

• The growth potential of tourism in India;

• The growth potential of Indian (international) Tourism;

• Role of National Tourism Authority, and

• Role /Support required from World Travel and Tourism Council (WTTC) for promoting

National Tourism.

In 2016, there were 1.235 billion international tourist arrivals worldwide, with a growth of

4% as compared to 1.186 billion in 20152. The top 10 international tourism destinations in

2016 were:

Figure-2: Growth potential of Indian Tourism (Source: Ministry of Tourism)

From the above diagram it is clear that with the passage of time the number of
tourist visiting India including domestic tourists is increasing significantly. Therefore,
occupying an extra portion of the chunk attracting the Global Tourists will lead Indian

Economy from developing to developed one in future.

1.2 SWOT ANALYSIS

To review the performance, to find the loopholes as well as provide solutions to them for

Tourism Industry, particularly in India, scope is there of conducting a SWOT Analysis3.

A SWOT analysis (alternatively SWOT matrix) basically signifies a structured planning method
used to evaluate the Strengths, Weaknesses, Opportunities and Threats involved in a
project or in a business venture. A SWOT analysis can be carried out for a product, place,
industry or person. It involves specifying the objective of the business venture or project
and identifying the internal and external factors that are favourable and unfavourable to
achieve that objective.

2. https://en.wikipedia.org/wiki/World_Tourism_rankings

3. https://www.omicsonline.org/open-access/a-review-of-indian-tourism-industry-with-swot-analysis-2167-

0269-1000196.php?aid=69120

4

TOURISM INDUSTRY

SWOT Analysis is an important technique of environmental analysis too. By SWOT, we can
observe the impact of each environmental sector like economic, political and social
on the organization. As a summarized depiction of the environmental factors and their
impact on future conditions, the profile is a convenient means by which attention of top
management can be drawn to the most critical factors and their potential impact on the
strategy of the firm as a whole, and key aspects of its operations. The logic behind this
technique is that an effective strategy maximizes a business’ strengths and opportunities
on the one hand and minimizes its weaknesses on the other.

The details of the words opportunities, threats, strengths and weaknesses are as follows:

OPPORTUNITIES

An opportunity is a major favourable situation in the Industry/ Organization’s environment.

Opportunities an Industry could represent an improved buyer and supplier relationships,
identification of a previously overlooked market segment, enjoying the benefit
of technological changes, changes in regulatory framework and in competitive
circumstances, etc.

As far as Tourism Industry in India is concerned the opportunities are more hands-on
role from the Government of India in terms of framing policies; allowing entry of added
multinational companies into the country, giving home country a worldwide perception;
these besides as wel as development of domestic tourism is one of the factors of the
growth of the tourism industry. A pioneer initiative by Ministry of Tourism, Government of

India has be taken that would help tap into the full prospective of tourism; a countrywide
promotion that aims at sensitizing key stakeholders towards tourists, through a process
of training and orientation; the Commonwealth Games 2010 in New Delhi was the
largest ever event in India’s sporting history. International players of different sports from
across the world visited to take part in CWG 2010. This resulted in India’s place on
the world map as a ‘sporting nation’ having the competence to host a major sporting
event. Major advance for the Indian tourism industry since many foreign tourists visited
to see the games as wel as sights. Definitely, CWG was a key source of income for the

Government (Approx. 1500 crores).

THREATS

Unfavourable situation in the Industry environment is a major threat to the individual
organizations. Major elements that could represent threats to the industry may be entrance
of a new competitor, slow market growth, increased bargaining power of key buyers or
suppliers, technological changes and changing regulations, etc.

The threats relates to Tourism Industry consist of aggressive strategies adopted by
other countries like China, Australia, Singapore in promoting their tourism its impact

SECTION 1 – INTRODUCTION

5
on Indian tourism; Tourist often ignored, Cheated and rudely dealt with spoils the
image of country. These incidents considerably reduce the foreign tourist arrivals in

India; Crime rates growing in the country ranging from insignificant thefts to serious
murder cases; diseases in recent years such as Dengue, Chikungunya and Swine Flu
are causing the tourists to stay away from visiting various parts of the country; Food
problems plague the tourists; lack of basic infrastructure and accommodations for
tourists in rural areas of the country; Women particularly western women get harassed
by the local men making the place unsafe for them and aged tourists.

Understanding the key opportunities and threats facing an Industry helps managers in
identifying realistic options from which they can make an appropriate strategy.

INDIAN TOURISM INDUSTRY AT A GLANCE FROM SWOT PERSPECTIVE

Figure-3: SWOT Analysis: Indian Tourism Industry

STRENGTHS

Strength is a comparative advantage or edges over our competitors. The skill, available
resources, goodwil , market leadership and buyer/seller relationships are the examples
of strengths of an industry. India’s geological location is a culmination of forests, deserts,
and mountains and beaches. A variety of culture, i.e., a mix of diverse civilizations and
their traditions; a wealth of archeological sites; Indian tourism is known for its heritage
and monuments; India has a corporation to administer support issues related to tourism;
country of prosperous heritage and traditions having an enormous and varied history;

Places of prehistoric civilization and settlements dating back to numerous centuries

6

TOURISM INDUSTRY
present in India; unity in Diversity, i.e., multicultural people staying collectively in the same
country. One of the best growing economies of the world; Growing literacy rate among
the local people and improving infrastructure leading to increase in tourist visits. India has
been maintaining good and pleasant association with different countries which helps the
people of those countries to get the visas easily to visit India.

WEAKNESSES

A weakness is a limitation or deficiency in resources, skills and capabilities that impede
effective information. Facilities, financial resources, management capabilities, marketing
skills and brand image and lack sufficient infrastructure could be the causes of weakness.

An intolerant attitude among certain sections of the people also affect tourism. In Indian

Tourism Industry the areas of weaknesses are improper.

There is no appropriate marketing of India’s tourism in foreign lands. Loss of local culture as
wel as the loss of traditional environmental awareness is one of the negative impacts of
uncontrolled tourism; Costly travel, elevated fuel prices resulting in the increase of fares of
flight and trains, the major means of transport for the tourists, lapses in security and safety,
incidents of flaunt and harassment of tourists in some places, gap between requirement
and supply of manpower.

These are reasons impede the follow of foreign tourists as well as that of the domestic.

Insufficient standard hotels in the country leading to the crisis of accommodation for the
visiting tourists there is lack of proper care infrastructure; poor health, lack of hygiene and
proper sanitation among common people especially in the rural parts of the country;

Incidents of local people harassing and torturing the visiting tourists especially the foreign
tourists in diverse parts of the country; and regular progress of different parts of the country
al these limitations keep the foreigners at bay

Tourism and Travel organization in the present day is mode of life of all individuals. Tourism
is considered as one of the principal industries in India, as it receives approximately 465.6
million domestic and worldwide tourists each year. India has the prospective to be the

No.1 tourist destination in the world provided: our strengths are maintained as it is and in
fact, we have to increase our standards. Our weaknesses should he minimized if it is not
possible to wipe them away completely we should make fine use of our opportunities.

And last but not the least. The government has to strive for these but it is not impossible
to get rid of our weaknesses. Madhya Pradesh bagged the Best Tourism State Award in

2012. A wish to break from routine or to look forward to an enhanced life, travel has forever
remained a constant joy ever since intelligent lifestyle came into being.

India has a dazzling future in the area of tourism and has a kaleidoscope of tourist
attractions and marvelous handicraft lifestyle product to offer to visitors. Realizing this

Government of India is giving intense attention to build up facilities to attract tourists from
world over. The venture in the present scenario requires capable and confident manpower
which has entire knowledge of the complicated technicalities involved in the soft working
of this industry.

SECTION 1 – INTRODUCTION

7

Parallely, Indian Tourism Industry needs enhancement in terms of behaviour, honesty
foremost influential factors like politeness, humility, willingness to help and accept people
has promoted their tourism. The above behavioural traits have to be strengthened and
toughened in India. Indian Tourism Industry is grossly underutilized or unexploited in case
of Tourism development.

The Government should gives sops like Tax holiday, Special packages to visit such areas
where the Tourists go radically. The Governments must step in the role of supervisor,
facilitator in order to support private investment in it. A Task Force needs to be made
comprising members from tour operators & concerned Ministries which could come out
with holistic and reasonable approach to gauge this opportunity of rolling Indian Tourism

Industry in the present time.

1.3 TYPES OF INVESTMENT4

Investment in the tourism industry implies that capital and goods could be created that
are capable of producing other goods or services for earning higher profits in the private
sector or regional revitalization and economic growth for public purposes. Now the question
is who is investing in Tourism Industry? Government has setup Tourism Finance Corporation
of India (TFCI) which is the nodal agency to invest and monitor the development and
policy matters of Tourism Industry in India. TFCI is also working with the private investment
agencies in PPP Model. Analyzing the treat of investors in Tourism Industry, there are three
types of investors’ class.

Basical y, Tourism investors include Strategic Investors (SI), Construction Investors (CI), and

Financial Investors (FI).

Figure-4: Investment Pattern: Indian Tourism Industry

4. http://english.visitkorea.or.kr/enu/invest/info/busin_underst.jsp

8

TOURISM INDUSTRY

Investment by Investor Type:

The Investment in Tourism Sector in India is accumulating through Multivariate Private

Agencies and directly from the Government. Analyzing the pattern of investor apart from

Government sources, we broadly tabled the different classes in fol owing categories:

Figure-5: Type of Investors: Indian Tourism Industry

SECTION 1 – INTRODUCTION

9

Financing Methods in Tourism Industry:

The companies as mentioned above irrespective of type make investments in two broad
categories. The brief details of the same are placed below:

A. Project Finance (PF)

1) Outline of Project Finance:

Project finance is the financing of projects based on the assets of the project like its cash
flows rather than the credit rating of a developer. Generally, a Special Purpose Company

(SPC) is established for a project, thereby securing the independence of the project
from business owners. Capital supply is made in forms of share participation or loaning
and financial expenses are paid by the business owner. Other investors are in charge of
damage (taking over principal and interest) until the termination of business. Financing
of a project consists principal y of equity allocating this to equity investors including a
business owner.

2) Project Finance Structure:

The typical project finance structure is generated from an investment contract between
strategic investors of a special purpose company (SPC) and financial investors, and
especially it is natural to secure the rights to the business after signing of an enforcement
agreement with the government for investments in social overhead capital (SOC).

B. Syndicated Loan:

1) Outline of Syndicated Loan:

A syndicated loan is provided by a group of lenders and is structured, arranged, and
administered jointly by multiple financial institutions (e.g. commercial banks or investment
banks) known as lead arrangers to share the risk involved.

* A syndicated loan is usually arranged when several financial institutions are engaged
in large-scale lending while a lead arranger joins a group of lenders, especially when it
is essential to fund large projects.

Recent Trends of Investment:

Travel & Tourism investment in 2017 was INR2,706.1bn, 6.3% of total investment

(USD41.6bn). It should rise by 6.7% in 2018, and rise by 6.7% pa over the next ten years to

INR5,546.3bn (USD85.2bn) in 2028, 6.1% of total.

Many companies, both domestic and international, have invested in India’s tourism sector
in the last two years like US-based Vantage Hospitality Group and Lalit Suri Hospitality Group.

The Thai firm Onyx Hospitality and Kingsbridge firm have set up a joint venture to open 7

10

TOURISM INDUSTRY
hotels in the country by 2018. Goldman Sachs, New-York based multinational investment
banking fund, has invested Rs 255 crore in Vatika Hotels. ITC is planning to invest about Rs

9,000 crore in the next few years to expand its hotel portfolio to 150 hotels.

1.4. TOURISM FINANCE CORPORATION OF INDIA (TFCI):

All India Financial / Investment Institutions and Nationalized Banks promoted a Public

Limited Company in 1989 under the name of “Tourism Finance Corporation of India Ltd

(TFCI)” to function as a specialized All India Development Financial Institution which would
cater to the financial needs of tourism industry. The core objectives of TFCI are to help

India in exploring the potential of tourism as an engine for economic growth including
generation of employment opportunities, showcase Indian tourism treasure to the world
through creation of Tourism Infrastructure, make India a preferred destination for globe-
trotters by expanding the horizon of tourism and to make long-term resources available
for the creation / development of Tourism Infrastructure.

TFCI is the only institution in the country to fund tourism projects exclusively, with more than

27 years of existence. Corporate spanning across varied sectors, e.g., hotel, infrastructure,
manufacturing, services and other diversified sectors are the main clients of TFCI. Details
of TFCI’s Products and Services are given below :

Tourism Project Financing:

FCI provides all forms of financial assistance for new projects, for the project related to
and expansion, diversification, renovation of modernization in tourism, sector services
sector and related activities, facilities and services. The projects where the TFCI is providing
services are shown in the following table :

Figure-6: Tourism Projects: Indian Tourism Industry

Other Financing:

TFCI provides all forms of financial assistance for new projects, expansion, diversification,
renovation/modernization of existing projects in industrial/manufacturing sector, real-estate
sector on selective basis, services sector and related activities, facilities and services.

SECTION 1 – INTRODUCTION

11

Figure-7: Sectors Associated with T & T: Indian Tourism Industry

Advisory Services:

TFCI provides high-quality research and Consultancy services to the tourism industry
in general and to the investors in particular. In line with this, TFCI has been providing

Consultancy services to different central and state agencies by undertaking broad-based
assignments to cover macro & micro level tourism-related studies / exercises to facilitate
identification, conceptualization, promotion / implementation of specific tourism-related
projects & for taking policy-level decisions with respect to investment and infrastructure
augmentation, etc. Besides, TFCI has been providing specific project-related services to
various private sector clients. It has also undertaken appraisal of individual projects for
various state government agencies / individual clients.

Project related Services for Private Sector:

• Site evaluation studies.

• Market-potential assessment for tourism projects.

• Techno-economic feasibility studies.

• Loan / Equity syndication services.

• Financial restructuring of project proposals, review and appraisal.

• Project implementation and monitoring services.

• Pre-opening technical and facility planning services.

• Other project-related services include assistance in finalization of arrangements
for lease / transfer of management, franchise tie-ups, selection of design / project/
architectural consultants, etc.

Institutional Services for Central and State Governments:

• Tourism-potential studies and identification of tourism circuits.

• Preparation of tourism-development Master Plans for state / travel circuit /
destination.

• Tourist profiles and image-rating studies.

• Tourist-flow surveys to assess destination draws, infrastructure gaps and defining
agenda for development.

12

TOURISM INDUSTRY

• Carrying out accommodation and other infrastructure assessment, augmentation
improvement studies.

• Sustainable tourism development, environment impact assessment studies
carrying capacity of studies of wild-life sanctuaries, national parks and other
sensitive / critical areas.

• Transaction advisory services for PPP projects.

1.5 FOREIGN DIRECT INVESTMENT IN INDIAN TOURISM INDUSTRY5:

Foreign direct investment (FDI) is an investment made by an organization/entity in one
country in an industrial/business activity in another country. FDI can take place in the
form of establishing new business operations from scratch or acquiring existing business
assets in the other country. FDI includes mergers and acquisitions, building new facilities,
expansion of existing production capacity, etc. FDI usually involves control/participation in
management, joint-venture, management expertise and technology transfer. It excludes
investment through purchase of securities or portfolio foreign investment, a passive
investment in the securities of another country, e.g., shares and bonds.

In order to stimulate domestic and international investments in the tourism sector, the

Indian Government allows 100 percent foreign direct investment (FDI) in its tourism industry
for the construction of hotels and similar projects and operations, which includes airport
expansion projects (subject to the approval of the Foreign Investment Promotion Board

(FIPB)). In addition, a five -year tax holiday is granted to organizations that set up hotels,
resorts and convention centres at specific destinations (subject to certain conditions).

Various international hospitality companies such as Hilton, Accor and the InterContinental

Hotels Group have already announced major venture plans in India over recent years,
and the hospitality division is expected to see an additional US$11.41 billion in inbound
investments over the next two years.

FDI Equity Inflows in Hotel & Tourism Sector from 2000-01 to 2016-176

India has seen lots of volatility in the annual FDI inflows in Hotel & Tourism Sector during the
period 2000-01 to 2016-17.

Table-1: FDI Equity Inflows in Hotel & Tourism Sector from 2010 to 2017(In UD$ Millions)

2009- 2010-

2011-

2012-

2013-

2014-

2015-

2016-

Year

10

11

12

13

14

15

16

17

Amount

421.5

753

308

993

3,259

486

777

1,333

916

Source : Ministry of Tourism (2017). Trends of Eq-Foreign Direct Investment(FDI)

5. https://www.india-briefing.com/news/foreign-direct-investment-indian-tourism- 6153.html/

6. https://community.data.gov.in/fdi-equity-inflows-in-hotel-tourism-sector-from-2000-01-to-2016-17/

SECTION 1 – INTRODUCTION

13

Figure-8: Equity Inflow Hotel & Tourism: Indian Tourism Industry

We have seen a decline of -31.26% in FDI inflows in Hotel & Tourism Sector to $ 916.13
million during 2016-17 over 2015-16. We have seen a growth of 71.52% in FDI inflows in

Hotel & Tourism Sector to $ 1332.69 million during 2015-16 over 2014-15. We have seen
a growth of 59.75% in FDI inflows in Hotel & Tourism Sector from $ 486.38 million during

2013-14 to $ 777.01 million during 2014-15.

The amount of FDI in Hotel & Tourism Sector was $ 308.05 mil ion in 2010-11. It decreased by

$ 444.97 mil ion as compared to 2009-10. In percentage terms, the decrease was -59.09%.

The share of FDI in Hotel & Tourism Sector in total FDI in India was 1.44% in 2010-11.

The maximum annual growth in FDI in Hotel & Tourism Sector of $ 2266.19 million was
recorded in the year 2012-13 during the period under consideration. The maximum annual
growth in percentage terms in FDI in Hotel & Tourism Sector of 228.25% was recorded in
the year 2012-13 during the period under consideration. The maximum share of FDI in

Hotel & Tourism Sector in total FDI in India of 14.53% was recorded in the year 2012-13
during the period under consideration.

1.6 TYPES OF TOURISM

Medical Tourism: Medical tourism refers to the practice, when you are travelling from your
home country (typically a greater developed country) to a lesser developed nation, of
projecting medical care at a lower price. This is a fast-growing industry in India because
of India’s lower prices for key health care treatments (prices are typical y up to 30 percent
lower in India as compared to the that of United States and the United Kingdom.

India’s medical tourism industry is estimated to increase to around US$20 billion over
the next few years, and India has promoted it by way of providing tourists with personal
healthcare services. It is projected that the total marketplace for medical tourism will

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TOURISM INDUSTRY
reach US$2 billion by 2015, and this sector is expected to grow at an estimated rate of 30
percent annually until 2015. An estimated 150,000 foreign tourists travel to India for low-
priced healthcare procedures each year.

Rural Tourism: Rural India has much to present to humanity as an ancient civilization rich in
arts, crafts and culture. Thousands of overseas tourists visit rural areas in Rajasthan, Gujarat
and south India every year. Exports of local handicraft have boomed as a result, with
exports from Rajasthan reaching nearly US$1 million in 2009. India’s handicrafts exports
jumped 17.5 percent year-on-year between 2011 and 2012 to US$2.7 billion.

In addition, the union tourism ministry and the United Nations Development Programme

(UNDP) have launched tourism projects for the development of rural tourism in India. The

UNDP plans to donate US$2.5 million to the project in addition to assist with capacity
building, and increasing participation from NGOs, local communities and artisans.

Adventure Tourism: This sector of tourism has seen increased attention because of India’s
vastly different geography and climate. Either on land, in water or in the air, you can enjoy
whatever form of adventure you may desire. India’s hilly regions present many opportunities
for mountaineering, rock-climbing, trekking, skiing, skating, mountain-biking and safaris,
and the rivers that flow from these mountains are ideal for river rafting, canoeing and
kayaking.

As a bonus, the ocean is not far from there and is easily accessible, providing many
chances for adventure in the form of diving and snorkelling.

MICE Tourism: Meeting, Incentive, Conferencing and Exhibition (MICE) tourism in India
offers the businessperson the latest and fastest growing type of international business
tourism. This sector caters to a variety of trade meetings, international conferences and
conventions, events and exhibitions, and has gradually captured the interests of major
hotel brands. Worldwide MICE tourism accumulates over US$280 billion annual y, and,
of this, the Asia-Pacific region alone earns US$60 billion. India earns about US$4.8 billion
yearly through MICE tourism. To capitalize, the Ministry of Tourism has initiated expansion in
this sector by investing a total of INR 2 billion to encourage tourism in major cities in India.

15

SECTION-2

BUSINESS SCENARIO

2.1 HISTORY

The business scenario in India has undergone a paradigm shift over the years. The
wide varieties of Indian businesses offer immense opportunities for the upcoming and
the growing sectors, such as Automobiles & Auto Components, Financial Services,

Food Industry, Gems and Jewelry, Healthcare, Information Technology, Insurance, IT
enabled, Services, Media & Entertainment, Oil & Gas, Real Estate, Retail, Steel, Textiles,

Telecommunications, Tourism & Hospitality, etc. With these numerous sectors at the bay,
the scope of doing business in India has grown in magnitude.

Therefore, the Government has had a huge role in the transformation of the Indian

Business scenario. To better the possibilities and take exhaustive advantage of the business
opportunities, the Government already has introduced major changes. These changes
were in terms of macroeconomic reforms, tax reforms, finance reforms and relaxing of
the capital market.

In following lines, we will assess Geographic and Economic Scenario Foreign Tourist Arrivals

(FTAs) in Indian Tourism Industry.

2.2 GEOGRAPHIC SCENARIO

Tourism Industry, in particular, is growing very fast. It has vast potential for generating
employment and earning large amount of foreign exchange besides giving a fillip to
the country’s overall economic and social development. By 2030 it will be nearly two
billion people, spending just over $2 trillion, in all corners of the world. As per the report
of UNWTO around two billion people, experiencing new cultures, are sharing new friends,
creating new businesses round the globe and these two billion people providing jobs and
an income for 400 million people globally. By 2030, Travel & Tourism wil be 11% of the
world’s economy. Each and every person who travels will play a part in this story of growth,
adventure and experience.

2.2.1 Foreign Tourist Arrivals (FTAs) in India from different Regions of the World:

Foreign Tourist Arrivals (FTAs) in India from different regions of the world from 2014 to

15

16

TOURISM INDUSTRY

2016 clearly show that FTAs in India have been increasing from all regions. The growth
was maximum from Eastern Europe (22.64%) fol owed by South Asia (12.76%), Australia

(11.79%), Central and South America (11.15%), East Asia (11.12%), West Asia (8.20%),

North America( 7.98%), Western Europe (7.94%), south East Asia (6.54%) and Africa(2.9%).

The Following Figure gives the details of FTAs in India during the last three years from all
the regions:

Table-2: Foreign Tourist Arrivals (FTAs) in India from Different Regions of the World,

2014-2016

Region/Country

Number of Arrivals

Percentage Share

Percentage

Change

2014

2015

2016

2014 2015

2016

2015/

2016/

14

15

South Asia

1694857 1946207

2194555 22.07 24.25

24.93

14.8

12.9

Western Europe

1860580 1880203

2029412 24.23 23.42

23.05

1.1

7.9

North America

1387468 1494930

1614178 18.07 18.62

18.33

7.7

8

South East Asia

685805

700298

746069

8.93

8.72

8.47

2.1

6.5

East Asia

546792

555770

617563

7.12

6.92

7.01

1.6

11.1

West Asia

413678

417616

451842

5.39

5.2

5.13

1

8.2

Eastern Europe

422278

331051

406002

5.5

4.12

4.61

-21.6

22.6

Australia

286294

312101

348908

3.73

3.89

3.96

9

11.8

Africa

280754

293569

301264

3.66

3.66

3.43

4.6

2.9

Central & South America

69926

70831

78730

0.91

0.88

0.89

1.3

11.2

Not Classified elsewhere

30667

24557

14988

0.39

0.32

0.19

-19.9

-39

Grand Total

7679099 8027133

8804411

100

100

100

4.5

9.7

Source: Bureau of Immigration, Govt. of India

The percentage share in FTAs in India during 2016 was the highest in South Asia (24.93%),
fol owed by Western Europe (23.05%), North America (23.33%), South East Asia (8.47%),

East Asia (7.01%), Eastern Europe (4.61%), Australia (3.96%), Africa (3.42%), and Central

& South America (0.89%).

2.2.2 Foreign Tourist Arrivals (FTAs), Arrivals of Non-Resident Indians (NRIs) and

International Tourist Arrivals (ITAs):

The Foreign Tourist Arrivals (FTAs) in India continued to grow from 5.78 million in 2010
to 8.80 million in 2016. During the year 2016, FTAs in India registered a growth of 9.7%
over that of 2015.

SECTION 2 – BUSINESS SCENARIO

17

Table-3: Inbound Tourism: Foreign Tourist Arrivals (FTAs), Arrivals of Non-Resident

Indians(NRIs) and International Tourist Arrivals (ITAs) 2000-2017(til June)

Year

FTAs in Percentage

NRIs

Percentage International Percentage

India (%) change arrivals (%) change Tourist arrival (%) change

(in
over
in India
over
in India
over

Million)

previous

(in
previous

(in Million)

previous

Year

Million)

Year

Year

2010

5.78

11.8

2011

6.31

9.2

2012

6.58

4.3

2013

6.97

5.9

2014

7.68

10.2

5.43

13.11

2015

8.03

4.5

5.26

-3.15

13.29

1.4

2016

8.8

9.7

5.77

9.7

14.57

9.7

2017(P)

Jan-

Nov

10.18

15.6

(P) Provisional estimates of Ministry of

Tourism

Source: Bureue of Immigration, Govt. of

India

The figure of FTAs for the year 2017 is more encouraging where the growth rate estimated
is 15.6%, which was 9.7 % in the previous year.

2.2.3 FTAs in India according to Gender:

Table-3 gives the gender-wise distribution of FTAs in India during the period 2010 to 2016.

The reporting of gender-wise breakup of the FTAs has been 100%.

Table-4: FTAs in India according to Gender 2010-2016

Gender Distribution (%)

Year

Arrivals

Male

Female

2010

5775692

59.3

40.7

2011

6309222

59.4

40.6

2012

6577745

58.7

41.3

2013

6967901

58.8

41.2

2014

7679099

59

41

2015

8027133

59.3

40.7

2016

8804411

59.4

40.6

Source: Bureau of Immigration, Govt. of India

18

TOURISM INDUSTRY

The figure shows that Female FTAs in most of the year is ranging between 40-50% as
compared to Male FTAs which is between 51-60% over the years.

2.2.4 Seasonality of FTAs in India:

Weather condition of different tourist destinations is one of the important determinations
of tourist arrivals.

Table-5: Lean and Peak Months of FTAs in India from Top 15 Countries during 2016

Sl No

Nationality

Lean Month(% share)

Peak Month(% Share

1

Bangladesh

June(4.0%)

December(12.7%)

2

USA

September(5.1%)

December(14.4%)

3

UK

Novenber(6.8%)

December(9.6%)

4

Canada

May (4.3%)

December(13.3%)

5

Malaysia

April (6.3%)

December(11.4%)

6

Sri Lanka

June(5.6%)

August(13.0%)

7

Australia

May(4.3%)

December(18.9%)

8

Germany

June(4.6%)

November(11.6%)

9

China

June(5.7%)

November(11.0%)

10

France

May(4.7%)

February(12.3%)

11

Russia Fed

June(1.5%)

December(18.7%)

12

Japan

June(6.5%)

November(10.5%)

13

Singapore

April(6.7%)

December(13.3%)

14

Nepal

May(6.7%)

October(9.9%)

15

Afghanistan

June(4.6%)

December(11.4%)

Source: Bureau of Immigration, Govt. of India

The peak and lean months for the arrival of tourists from Top 15 source markets for India
during 2016 are presented in Table-5. For 8 countries, namely, the USA, the UK, Bangladesh,

Canada, Australia, Malaysia, Russia and Singapore December was the peak month. Peak
month for each of these countries accounted for more than 10% of the FTAs except for
the UK and Nepal for which peak month accounted for 9.6% and 9.9%, respectively.

2.2.5 Age Group-wise distribution of FTAs:

Table-6 gives the percentage distribution of FTAs in India according to their age group
during 2010- 2016. The proportion of FTAs in different age group has not changed much
during the period in consideration.

SECTION 2 – BUSINESS SCENARIO

19

Table-6: FTAs in India according to Age Group 2010-2016

% Distribution by Age-Group (in years)

01-

65 %

Year

Arrivals

2014

15-24 25-34 35-44 45-54 55-64 above

2010

5775692

10

8.3

17.4

21.1

19.9

13.8

9.5

2011

6309222

10.5

7.9

16.6

21.2

19.7

13.7

10.5

2012

6577745

11

8

16.5

21

19.8

13.9

9.9

2013

6967901

9.5

8.7

19.1

21

20

14

7.7

2014

7679099

9.2

8.5

18.9

21

20.1

14

0.3

2015

8027133

9.4

8.5

19.2

21.2

20

13.8

7.9

2016

8804411

9.5

8.5

19.2

21.1

19.9

13.8

8

Source: Bureue of Immigration, Govt. of

India

In 2016 the highest number of FTAs in India was 33-44 years age group (21.1%) fol owed by
the age group of 45-54 years (19.9%) and 25-34 years (19.2%). The lowest number of FTAs
during the same period accounted in the age group of 65 and above (8%).

2.2.6 FTAs in India according to purpose:

As per the report of Ministry of Tourism the details of region-wise FTAs in India during 2016
are given in the following table-7.

Table-7: Distribution of Region-wise FTAs in India according to Purpose 2016

Location

Arrivals

Business and

Leisure

Medical

Indian

Others

Professional Holiday and

Diaspora

Recreation

North America

Total

1614178

10.3

52.3

0.06

33.69

3.65

Central & South

America

Total

78730

16.94

74.57

0.08

6.06

2.35

Western Europe

Total

2029412

20.59

57.53

0.06

18.53

3.29

Eastern Europe

Total

406002

14.69

78.99

2.57

2.02

1.72

Africa

Total

302164

17.28

42.51

16.3

14.58

9.33

West Asia

Total

451842

8.73

70.9

15.02

2.73

2.62

South Asia

20

TOURISM INDUSTRY

Total

2194555

7.61

72.37

13.15

3.1

3.77

South East Asia

Total

746069

12.62

69.7

0.4

12.46

4.82

East Asia

Total

617563

50.75

43.61

0.04

4.01

1.58

Australia

Total

348908

9.98

50.23

0.32

36.67

2.8

Not Classified

14988

12.78

60.04

0.62

8.29

18.28

Elsewhere

Grand Total

8804411

15.58

61.48

4.85

14.54

3.55

Source: Bureau of Immigration, Govt. of India

Note-1: The Purpose-wise and Nationality-wise distribution of Foreign Tourist Arrivals(FTAs) in India
has been worked out on the basis of 7441867 records for which information related to visas
were available from the Bureau of Immigration. The Visa Type has been clubbed together to
derive the propose are as follows:

Purpose

Visa Type

Business and

Professional

Business, Conference, Employment and Official

Leisure Holiday and

Recreation

Pilgrimage and Tourist

Medical

Medical, Medical Attendant and Medical X

Indian Diaspora

ICO, PIO, Entry and Universal

Others

Art Sur ogacy, Diplomatic, Journalist, Long Term, Meeting Friends and

Relatives, Missionary, Mountaineering, Research, SAARC, Sports, Student,

Transfer of visa, Transit, UN, Visit/Visitor and others / Miscel aneous.

Note-2: Country Composition

North America

Canada, USA

Central & South

Argentina, Brazil, Mexico, Others

America

Western Europe

Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland,

Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, UK,

Others)

Eastern Europe

Eastern Europe(Czech Republic, Hungary, Kazakishistan, Poland, Russia

Federation, Ukraine, Others)

Africa

Egypt, Kenya, Mauritius, Nigeria, South Africa, Sudan, United Republic of

Tanzan, Others

West Asia

Bahrain, Iraq, Israel, Oman, Saudi Arabia, Turkey, the United Arab

Emirates, Yemen, Others

South Asia

Afghanistan, Bangladesh, Bhutan, Iran, Maldives, Nepal, Pakistan, Sri

Lanka

SECTION 2 – BUSINESS SCENARIO

21

South East Asia

Indonesia, Malaysia, Myanmar, Philippians, Singapore, Thailand,

Vietnam, Others

East Asia

China, Japan, Republic of Korea, Taiwan, Others

Australia

Australia, New Zealand, Others

2.2.7 Top 15 Countries for FTAs in India:

Table-8 gives the percentage share of top 15 source countries for India during 2015 and

2016. The top 15 tourist generating countries for India during 2015 and 2016 were mostly
the same with minor changes in the ranking of some countries:

Table-8: Top 15 Source Countries for FTAs in India during 2015 & 2016

Rank in

Country

FTAs in

%

Rank in

Country

FTAs in

%

2015

India in

Share

2016

India in

Share

2015
in

2016
in 2016

2015

1

USA

1213624

15.12

1

Bangladesh 1380409

15.68

2

Bangladesh

1133879

14.13

2

USA

1296939

14.73

3

UK

867601

10.81

3

UK

941883

10.7

4

Sri Lanka

299513

3.73

4

Canada

317239

3.6

5

Canada

281306

3.5

5

Malaysia

301961

3.43

6

Malaysia

272941

3.4

6

Sri Lanka

297418

3.38

7

Australia

263101

3.28

7

Australia

293625

3.33

8

Germany

248314

3.09

8

Germany

265928

3.02

9

France

230854

2.88

9

China

251313

2.85

10

Japan

207415

2.58

10

France

238707

2.71

11

China

206322

2.57

11

Russian

227749

2.59

Federation

12

Russian

172419

2.15

12

Japan

208847

2.37

Federation

13

Nepal

154720

1.93

13

Singapore

163688

1.86

14

Singapore

152238

1.9

14

Nepal

161097

1.83

15

Pakistan

124924

1.56

15

Afganistan

123330

1.4

Total

5829171

72.62

Total

6470133

73.49

Top 15

Top 15

Countries

Countries

Other

2197962

27.38

Other

2334278

26.51

Countries

Countries

22

TOURISM INDUSTRY

Grand

8027133

100

Grand

8804411

100

Total

Total

Source: Bureau of Immigration, Govt. of India

FTAs in India from Bangladesh were highest (15.68%) during 2016, whereas the USA turned
to second highest position in 2016 from highest in 2015. The share of FTAs from Top 15
countries during the year 2016 was 73.49% as compaired to that of 72.62% in 2015.

According to a recent report by the World Economic Forum (WEF), India has achieved
the 52nd rank among the list of 141 countries worldwide as per the Travel & Tourism

Competitiveness Index (TTCI) 2015. It is also a great achievement that the country has
moved up 13 notches to the 52nd position as compared to 2013. The top 10 countries are

Spain, France, Germany, the US, the UK, Switzerland, Australia, Italy, Japan and Canada
whereas in emerging countries list we have China (17th), Brazil (28th), Russia (45th), South

Africa (48th) and India (52nd).

This shows that though India has moved up in the global list to a great extent, its position
is still not better than its emerging market peers like China, Brazil, Russia and South Africa.

India has still a long way to go.

2.3 THE ECONOMIC SCENARIO:

The analysis of World Industry GDP Growth (Sector-wise in percentage) reveals encouraging
figures as far as Travel and Tourism Industry is concerned. The summary of the same is
presented below :

Figure-9: World Industry GDP Growth

( Source: Compiled from Investm ent Report- World Bank, 2018)

Therefore, there is ample scope of revenue generation from the Travel & Tourism (T & T)

Sector from the economic point of view. As one of the world’s largest economic sectors,

Travel & Tourism creates jobs, drives exports, and generates prosperity across the world. The

Annual Analysis of the global economic impact of Travel & Tourism shows that the sector

SECTION 2 – BUSINESS SCENARIO

23
accounts for 10.4% of global GDP and 313 million jobs, or 9.9% of total employment in

2017. In following paras, we will discuss the same in detail:

2.3.1 Direct Contribution of Travel & Tourism (T & T) to Global GDP:

On the basis of real time data available from 2012 onwards till date as far as worldwide
growth of GDP, we will find an encouraging able figure which is placed below:

*E=Estimated; **F=Forecast

Figure-10: Contribution of T & t to GDP (Global)

Real GDP contribution of T & T or Gross Domestic Product (GDP) at constant 2017 prices
in the year 2016-17 is likely to attain a level of 91.27 billion USD as against the Provisional

Estimate of GDP for the year 2017-18 of 98.17 billion USD, released by World Travel and

Tourism Council in its Economic Impact Report 2018. As per the report, there will be a
significant growth of GDP at 194.69 Billion USD by 2028 which is around 300 percent
growth as compared to the year 2012.

2.3.2. The Economic Contribution of Travel & Tourism: Real 2017 Prices

The overall growth in GDP during 2017-18 is estimated at 6.5 per cent. With GDP at current
prices in the year 2017-18 is likely to attain a level of Rs. 166.28 lakh crore, as against Rs.

151.84 lakh crore in 2016-17 showing a growth rate of 9.5 per cent. Direct contribution of

Travel & Tourism to GDP is has steadily increased over the years with a little deviation in the
year 2013 (Table- 9).

24

TOURISM INDUSTRY

TABLE-9: THE ECONOMIC CONTRIBUTION OF TRAVEL & TOURISM: REAL 2017 PRICES

INDIA (INR bn, real 2017

2012

2013

2014

2015

2016

2017

2018E

2028F
prices)

1. Visitor Exports

1159.8 1231.3 1336.6 1429.3

1578.1

1777.1

1934.1

3316.4

2. Domestic Expenditure

8570.5 9087.7 9730.5

10668

11678

12114

13000

26428

(including Government
individual spending)

3. Internal Tourism

9730.3

10319

11067

12.98

13256

13891

14934

29744

Consumption (=1+2)

4. Purchases by Tourism

-5580.5

-5906

-6330.2 -6916.5 -7579.8 -7947.9 -8540.9

-17066

Providers, including imported
goods (supply chain)

5. Direct Contribution

4149.8 4413.1 4736.9 5181.2 5676.6 5943.3

6392.7

12678
of Travel & Tourism to

GDP(=3+4)

Other Final Impacts (indirect & 5255.7 5589.1 5999.2 6561.9

7189.3

7527.2

8096.3

16057
induced)

6. Domestic Supply Chain

7. Capital Investment

2192.9 2306.1 2416.5 2598.3

2648.1

2706.1

2888.3

5546.3

8. Government Col ective

108.9

114.7

122.6

128.4

150.6

169.9

188.4

367.9

Spending

9. Imported Goods from

-2236

-2354.4

-2467

-2650.2

-2703

-2766.1

-2951

-5687.6

Indirect Spending

10. Induced

1207.6 1276.3 1381.1 1465.7

1573.3

1659.3

1771.8

3092.1

11. Total Contribution of

10679

11345

12189

13285

14535

15240

16387

32053

Travel & Tourism to GDP

(=5+6+7+

8+9+10)

The table as presented above shows some important figures as far as total contribution
of T & T to gross domestic product as well as considering the factors such as Capital

Investment, Imported Goods from indirect spending, etc. which affect to find GDP. It can
be seen from the figures that, trend of total contribution of T & T to the GDP of India is
steadily increasing and the projected GDP contribution will be around three times in 2028
compared to the same for the year 2012. This could be considered as a very positive sign
of improvement of Tourism Industry.

SECTION 2 – BUSINESS SCENARIO

25

2.3.3 The Economic Contribution of Travel & Tourism: Nominal Prices:

The nominal GDP are calculated at market or government exchange rates. The parameters
used for calculating the GDP in real remain same. The World Travel and Tourism Council
have calculated the GDP in Nominal price which is shown in the following table:

Table-10: THE ECONOMIC CONTRIBUTION OF TRAVEL & TOURISM: NOMINAL PRICES

INDIA (INR bn, nominal

2012

2013

2014

2015

2016

2017

2018E

2028F
prices)

1. Visitor Exports

963.4

1089.3

1237.7

1340.5

1519.8

1777.1

2053.6

5748.4

2. Domestic Expenditure

7119.2

8039.4

9010.6 10005.1 11247

12114

138.3

45808

(including Government
individual spending)

3. Internal Tourism

8082.5

9128.7

10248

11346

12766

13891

15857

51557

Consumption (=1+2)

4. Purchases by Tourism

-4635.5

-5224.7 -5861.9 -6486.5 -7299.6 -7947.9 -9068.8 -29582

Providers, including imported
goods (supply chain)

5. Direct Contribution of

3447

3904

4386.4

4859.1

5466.7

5943.3

6787.9

21975

Travel & Tourism to GDP

(=3+4)

Other Final Impacts (indirect 4365.7

4944.4

5555.4

6154

6923.6

7527.2

8596.8

27831

& induced)

6. Domestic Supply Chain

7. Capital Investment

1821.5

2040.1

2237.8

2436.8

2550.2

2706.1

3066.9

9613.6

8. Government Col ective

90.4

101.4

113.5

120.4

145

169.8

200

637.8

Spending

9. Imported Goods from

-1857.4

-2082.8 -2284.5 -2485.5 -2603.1 -2766.2 -3133.5 -9858.5

Indirect Spending

10. Induced

1003.1

1129.1

1278.9

1374.5

1515.1

1659.3

1881.3

5359.7

11. Total Contribution of

8.870.4 10036.2

11288

12459

13998

15240

17400

55559

Travel & Tourism to GDP

(=5+6+7+ 8+9+10)

Source: Report of World Travel & Tourism Council-2018

It is necessary to mention here that the direct contribution of Travel & Tourism to GDP

26

TOURISM INDUSTRY
reflects its ‘internal’ spending on Travel & Tourism (total spending within a particular country
on Travel & Tourism by residents and non-residents for business and leisure purposes) as
wel as government’s ‘individual’ spending, spending by government on Travel & Tourism
services directly linked to visitors, such as cultural (e.g., museums) or recreational (e.g.,
national parks).

The direct contribution of Travel & Tourism to GDP is calculated to be consistent with the
output, as expressed in National Accounting, of tourism-characteristic sectors such as
hotels, airlines, airports, travel agents and leisure and recreation services that deal directly
with tourists.

From the table, it can be seen that the GDP in nominal price is also steadily in an
increasing order over the period, and it will become a huge amount of 55559 billion in

2028 (projected).

2.3.4 The Economic Contribution of Travel & Tourism: Growth % on GDP

Table-3 shows the contribution of percentage growth of Travel & Tourism on GDP in India.

The real growth rate is calculated by considering the values of all final goods and services
produced within a country in a given year. From the table it is clear that over the year there
will be no such significant changes in the growth rate, though the growth was maximum in

2016.

TABLE-11: THE ECONOMIC CONTRIBUTION OF TRAVEL & TOURISM: GROWTH

INDIA (Growth in %)

2012 2013 2014 2015 2016 2017

2018E 2028F

1. Visitor Exports

5.9

6.2

8.6

6.9

10.4

12.6

8.8

5.5

2. Domestic Expenditure (including 6.1

6

7.1

9.6

9.5

3.7

7.3

7.4

Government individual spending)

3. Internal Tourism Consumption

6.1

6.6

7.2

9.3

9.6

4.8

7.5

7.1

(=1+2)

4. Purchases by Tourism Providers,

5.5

5.8

7.2

9.3

9.6

4.9

7.5

7.2
including imported goods (supply
chain)

5. Direct Contribution of Travel &

6.9

6.3

7.3

9.4

9.6

4.7

7.6

7.1

Tourism to GDP(=3+4)

Other Final Impacts( indirect &

6.9

6.3

7.3

9.4

9.6

4.7

7.6

7.1
induced)6. Domestic Supply Chain

7. Capital Investment

9.4

5.2

4.8

7.5

1.9

2.2

6.7

6.7

SECTION 2 – BUSINESS SCENARIO

27

8. Government Col ective

5.5

5.3

6.9

4.7

17.3

12.8

10.9

6.9

Spending

9. Imported Goods from Indirect

13

5.3

4.8

7.4

2

2.3

6.7

6.8

Spending

10. Induced

3.8

5.7

8.2

6.1

7.3

5.5

6.8

5.7

11. Total Contribution of Travel

5.8

6.2

7.4

9

9.4

4.8

7.5

6.9

& Tourism to GDP (=5+6+7+

8+9+10)

Source: Report of World Travel & Tourism Council-2018

Note: 2012-2017 Real Annual Growth adjusted for Inflation (%); 2018-2028 Annualized Real

Growth adjusted for Inflation (%).

2.3.5 Per Capita Income:

The per capita net national income during 2017-18 is estimated to be Rs 111,782
showing a rise of 8.3 per cent as compared to Rs. 103,219 during the period 2016-17 with
the growth rate of 9.7 percent. The per capita income in real terms (at 2011-12 prices)

during 2017-18 is likely to attain a level of Rs. 86660/- as compared to Rs. 82269/- for the
year 2016-17. The growth rate in per capita income is estimated at 5.3 per cent during

2017-18, as against 5.7 per cent in the previous year. The increase in per capita income
increases the purchasing power of the individual. Therefore, it is expected that this will
push the development of Travel of Tourism.

2.3.6 Gross Value Added (GVA) at Basic Prices

The estimated growth in GVA for Travel and Tourism Sector during 2017-18 is placed at

8.7 percent as compared to the growth of 7.8 percent in 2016-17. The key indicators
of this sector are the hospitality segment, transport, communication and services
related to broadcasting, etc. with the growth. The tables 12 and 13 derived below
show the contribution of trade, hotels, transport, communication and services related
to broadcasting, which constitutes the Travel and Tourism Industry, estimated by first
advance estimates of Gross Value Added by economic activities at basic price in 2011-

12 and current price, respectively.

28

TOURISM INDUSTRY

Table-12: First Advance Estimates of GVA at

Basic Price by Economic Activity

(At 2011-12 prices) (Rs. crore)

Industry

2015-16

2016-17

2017-18

Percentage change

(PE)

(Ist AE)

over previous year

2016-17 2017-18

1. Agriculture, forestry & fishing

1,617,208

1,696,175

1,732,371

4.9

2.1

2. Mining & quar ying

324,740

330,485

339,972

1.8

2.9

3. Manufacturing

1,872,115

2,019,227

2,112,345

7.9

4.6

4. Electricity, gas, water supply &

224,447

240,590

258,672

7.2

7.5
other utility services

5. Construction

879,782

894,668

927,085

1.7

3.6

6. Trade, Hotels, Transport,

1,989,161

2,143,956

2,329,801

7.8

8.7

Communication and Services
related to Broadcasting

7. Financial, real estate &

2,298,798

2,429,638

2,606,602

5.7

7.3
professional services

8. Public administration, defence

1,284,263

1,430,002

1,564,473

11.3

9.4
and Other Services

GVA at Basic Price

10,490,514

11,185,440

11,871,320

6.6

6.1

Source: Draft National Estimates for 2017, GoI.

All these Geographic and Economic Indicators are enough to convince that the Travel
and Tourism Sector is having an ample scope to grow in the coming years.

SECTION 2 – BUSINESS SCENARIO

29

Table-13: First Advance Estimates of GVA at Basic Price by Economic Activities

(At current prices)

2015-16

2016-17

2017-18

Percentage change

Industry
over previous year

2016-17 2017-18

1. Agriculture, forestry & fishing

2,175,547

2,372,085

2,438,546

9.0

2.8

2. Mining & quar ying

296,253

301,921

341,843

1.9

13.2

3. Manufacturing

2,064,820

2,257,413

2,422,101

9.3

7.3

4. Electricity, gas, water supply &

321,651

342,422

368,269

6.5

7.5
other utility services

5. Construction

1,006,403

1,041,343

1,109,608

3.5

6.6

6. Trade, Hotels, Transport,

2,294,364

2,519,999

2,825,708

9.8

12.1

Communication and Services
related to Broadcasting

7. Financial, real estate &

2,631,120

2,889,048

3,186,115

9.8

10.3
professional services

8.

Public
administration,

1,668,486

1,945,683

2,205,463

16.6

13.4
defence and Other Services

GVA at Basic Price

12,458,642

13,669,914

14,897,653

9.7

9.0

2.3.7 Total Contribution to GDP 2016–2027 (Global Statistics)- Country-wise

Travel & Tourism has been out pacing the global economy for the past six years, which is
reflected in the growth figures of individual countries as wel . Several countries have shown
especially dramatic growth in visitor exports over this period of time.

At the country level, the fastest growing larger Travel & Tourism countries are expected to
be China, India, Thailand, and Indonesia. By 2027, China is expected to have overtaken
the USA in terms of total Travel & Tourism GDP, domestic Travel & Tourism spending and
investment. However, the USA is expected to remain on top in terms of direct Travel &

Tourism GDP, visitor exports and business travel spending:

30

TOURISM INDUSTRY

Figure-11: Total Contribution to GDP 2016–2027 (Global Statistics)- Country-wise

India is expected to establish itself as the fourth largest Travel & Tourism economy by 2027,
both in terms of direct and total GDP, only behind China, the USA and Germany.

Apart from the countries named above, Thailand is expected to continue its fast-paced
growth and become the third largest market for visitor exports by 2027, taking over Spain
which is expected to drop to fourth place. Other notable countries expected to move up
the Travel & Tourism GDP rankings considerably by 2027 include Qatar, UAE, and Vietnam

2.3.8 FDI Inflow

As per the report of Ministry of Tourism placed in the Parliament in 2016-17 the Foreign

Exchange Earnings from tourism were at $27.7 billion, witnessing a growth of 20.8 per cent
over 2016. Fol owing table represents the FEEs of India from 2000-2017:

Table-14: FDI Inflow: Foreign Exchange Earnings (FEEs) in US$ million,
from Tourism in India 2000-2017 (til June)

Year

FEE from Tourism in India Percentage (%) change

(in US$ Mil ions)

over the Previous Year

2000

3460

15

2001

3198

-7.6

2002

3103

-3

2003

4463

43.8

2004

6170

38.2

2005

7493

21.4

2006

8634

15.2

2007

10729

24.3

2008

11832

10.3

SECTION 2 – BUSINESS SCENARIO

31

2009

11136

-5.9

2010

14193

27.5

2011#1

16564

16.7

2012#1

17737

7.1

2013#2

18445

4

2014#2

20236

9.7

2015#2

21071

4.1

2016#2

22923

8.8

2017#2(Jan-Jun)

13230

22.3@

#1: Provisional estimate ( based on Provisional FTAs), @: Growth Rate over

Jan-Jun, 2016

#2: Revised estimate ( Based on the Final FTAs received from BOI)

Source: (1)Reserve Bank of India, for 2000-2010

(2) Ministry of Tourism, Govt. Of India, for 2011-2017

The report of Economic Survey 2018 shows that Foreign Exchange Earnings (FEEs) from
tourism grew 20.8 per cent to $27.7 billion in 2017, helped by the initiatives taken by the
government for the sector.

Therefore, it is high time to think of gaining the highest level of expertise to beat the global
competition and capture this sector professionally to earn a larger amount of the foreign
exchange in days to come.

We can quote here the words of David Scowsill, President and CEO, WTTC. He said:

“India is a tremendous Travel and Tourism economy and I am pleased to see the
sector GDP is growing. However, we believe that these numbers could be even higher,
and that the positive impact of our sector could be more wide-ranging. India has a
huge potential to increase its international visitors and, in doing so, it can create more
jobs and drive economic growth”7

Foreign Tourist Arrivals (FTAs) stood at 8.8 million and FEEs were at $22.9 billion in 2016.

As per the provisional data of Ministry of Tourism, foreign tourist arrivals (FTAs) stood at 10.2
million during 2017, a growth of 15.6 per cent.8

2.3.9 Indian National Departures

Visitor exports generated INR1,777.1bn (USD27.3bn), 5.8% of total exports in 2017. The

7. https://economictimes.indiatimes.com/topic/World-Travel-and-Tourism-Council

8. https://www.financialexpress.com/budget/economic-survey-2018-forex-revenue-from-
tourism-touches-27-7-billion/1034836/

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TOURISM INDUSTRY
forecast is that it will grow by 8.8% in 2018, and grow by 5.5% pa, from 2018-2028, to

INR3,316.4bn (USD50.9bn) in 2028, 5.1% of total.

2.3.10 Domestic Tourism:

Domestic tourism continues to be an important contributor to the sector. As per the data
furnished by State/UT Governments and other information available with the Ministry of

Tourism, the domestic tourist visits during the year 2016 were 1613.6 million as compared
to 1432 million in 2015, and significant growth is seen every year with an increase of per
capita income of Indian Nationals.

2.3.11 Employment

Direct Contribution

In 2017 Travel & Tourism directly supported 26,148,000 jobs (5.0% of total employment).

This is expected to rise by 2.8% in 2018 and rise by 2.1% pa to 33,195,000 jobs (5.3% of
total employment) in 2028.

Total Contribution

In 2017, the total contribution of Travel & Tourism to employment, including jobs indirectly
supported by the industry was 8.0% of total employment (41,622,500 jobs). This is
expected to rise by 3.1% in 2018 to 42,898,000 jobs, and rise by 2.0% pa to 52,279,000
jobs in 2028 (8.4% of total).

2.4 GOVERNMENT INITIATIVES

As per the Travel and Tourism Competitiveness Index released by the World Economic

Forum in April 2017, India ranks 40 in among 136 economies across the world, up 12
places since 2015. In the last three years, the government has launched several key
projects as well as continued some old projects of the previous government to boost
the travel and tourism sector. Among its top initiatives are Swachh Bharat Campaign,
electronic visa (E-visa), digital application, and Ude Desh Ka Aam Nagrik Scheme (UDAN)

among others. Initiatives such as sanctioning visa on arrival (VoA) and extending electronic
travel authorization (ETA) to more countries, developing a mobile application for tourists
and introducing the Incredible India multilingual tourist helpline have definitely helped in
progress and socio-economic growth.

Focus on international destinations has been an integral part of the tourism ministry’s
agenda and it has released several campaigns in international and domestic markets
to promote various tourism destinations and products of India to increase foreign tourist
arrivals and domestic visits within the country. The Government of India has launched
several branding and marketing initiatives such as ‘Incredible India’ and ‘Athiti Devo Bhava’,

SECTION 2 – BUSINESS SCENARIO

33
which have provided a focused drive to growth. Moreover, ‘Incredible India 2.0’ aims at
showcasing the country as a spiritual and wellness destination; with this, the country is
poised to emerge as an important wellness destination in South Asia. In addition, the
liberalization of the visa regime has facilitated entry of foreigners into India for tourism,
business and medical purposes. E-visa for nationals of 163 countries has been a game
changer and given a big boost to foreign tourist inflow.

Simultaneously, the Ministry is also focused on consolidating domestic tourism within India.

In February 2017, the state governments of Chhattisgarh, Gujarat, Karnataka, Rajasthan
and Uttarakhand signed 86 MoUs worth Rs 12196.7 crore for developing tourist destinations
in their respective states. In addition, with government policies, such as ‘Make in India’

and ‘Startup India’ there’s more demand for travel across smal er cities. Further, the latest
scheme of UDAN is aimed at giving further impetus to both domestic and inbound tourism
and it acts as a booster for business and leisure travel.

Some sectors which are interlinked with Travel and Tourism include:

(a) Infrastructure Sector

Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible
for propel ing India’s overall development and enjoys intense focus from the Government
for initiating policies that would ensure time-bound creation of world-class infrastructure
in the country. Infrastructure sector includes power, bridges, dams, roads and urban
infrastructure development. In 2016, India jumped 19 places in World Bank’s Logistics

Performance Index (LPI) 2016 to rank 35th amongst 160 countries. The Government of

India is taking every possible initiative to boost the infrastructure sector and is expected to
invest highly in it, mainly making highways, renewable energy and urban transport, during

2018.

(b) NBFC Sector

Despite sluggish economic growth, slowdown in demand and sharper bank focus on
retail loans, NBFCs have been gaining market share across major asset classes. Present
in the competing fields of vehicle financing, housing loans, hire purchase, lease and
personal loans NBFCs have emerged as key financial intermediaries for small-scale and
retail sectors, thereby forming an essential part of shadow banking in India. NBFCs are the
third largest segment in the Indian financial system after commercial banks and insurance
companies and account for 9% of the total financial assets. Moreover, small and medium
enterprise loans account for 10.5% share in the overall credit of NBFCs in FY17. In case of
banks, MSE loans accounted for a mere 5.2%. However, NBFCs cannot access low-cost
deposits like their banking peers. As such, NBFCs depend on issuing NCDs, CP and short/
medium term bank borrowings for liquidity. As per CARE ratings report, for systemical y

34

TOURISM INDUSTRY
important NBFCs, the liability mix comprised borrowings by way of NCDs (49%), bank loans

(22%) and commercial paper (10%) and balance by way of other current liabilities.

(c) Real-Estate Sector

With a general upswing in the economy, the Indian real estate sector has also witnessed
growth with rise in the demand for residential spaces in particular. India’s real estate market
is expected to reach US$ 180 billion by 2020 from US$ 126 billion in 2015. The Government
of India has been supportive to the real estate sector. The Government has also allowed

FDI upto 100 per cent for townships and settlements development projects and real-
estate projects within the Special Economic Zone (SEZ). Government of India’s Housing
for All initiative is expected to bring US$ 1.3 trillion investments in the housing sector by

2025. Under Union Budget 2018-19, Pradhan Mantri Awas Yojana (PMAY) (Gramin) was
al ocated Rs 33,000 crore (US$ 5.10 billion), while the urban programme of the scheme
was allocated Rs 31,500 crore (US$ 4.87 billion). The scheme is expected to push
affordable housing and construction in the country and give a boost to the residential
real-estate sector. Lately, the sector has seen a major revamp with the implementation
of Real Estate Regulation & Development Act (RERA), which has introduced transparency
and accountability for developers and increased consumer confidence especially in
distressed ongoing projects. In addition, the GST and the Benami Property Act will also have
a major impact on how developers run their businesses. The government has also released
draft guidelines for the investments by Real Estate Investment Trusts (REITs) in non-residential
segment, which is likely to push investment in commercial office-space sector too.

The growth in India’s tourism, infrastructure, industrial/manufacturing, real estate and
services sectors is expected to result in opportunities for TFCI to expand its business at a
steady rate in near future.

2.5 COMPREHENSIVE RISK MANAGEMENT SYSTEM9:

There should be comprehensive risk management system in all the new business
proposals associated with the Industry as Travel& Tourism is purely a Service Sector. The risk
assessment process would involve judgment being made of the commitment, reliability,
resilience and financial/other capability of the prospective customer. This may include
an examination of industry scenario, client’s track record, financial history, competitive
position, skills of promoters, etc.

Risk Identification

Identification of risk is the first step in the Risk Assessment System. The versatile risk inherent
in all proposal is a function of certain risk factors, some of which are specified below:-

9. http://www.tfciltd.com/CorporatePolicy/CRM%20POLICY%202018-19.pdf

SECTION 2 – BUSINESS SCENARIO

35

Financial Risk

This would include assessment of the entity’s overal financial strength based on the
performance and financial indicators, as derived from its financial statements- historical
and projected.

Some of the key parameters would be:

• FACR

• DER

• Current Ratio

• Total outside Liability /Tangible Net Worth (TOL/ TNW)

• PBDIT (Profit before Depreciation, Interest, Tax)/Interest

• Profit after Tax (PAT)/Net Sales

• Break-Even Analysis & Profitability Ratios

• Return on Capital employed (ROCE)

• Internal Rate of Return

While assessing the overall financial strength of the unit, the static ratios and future
prospects of the unit would be considered. The industry comparison of the above ratios
will also be made.

Business Risk

Business risk analysis assesses the business fundamentals of the unit, the competitive
market position in the industry and its operational efficiency. Key factors would include its
geographic reach, distribution and selling arrangements, capacity utilization, nature of
the technology employed. The business risk associated with the unit would be reflected in
its financial risk ratios and their comparison with the industry average, which are covered
under financial risk parameters.

Industry Risk

This relates to the industry of which the unit is a constituent. The unit/ firm will be subject
to the risk factors to which the industry is exposed. In assessing the industry risk, the key
parameters would be competition, entry barriers, cyclicality, industry outlook, regulatory
risk/ government policies and other contemporary issues.

Management Risk

It involves evaluation of the management of the enterprise, their risk philosophy,
competence and past track record. The key parameters are the integrity (corporate
governance), managerial competence and commitment, credibility (ability to meet

36

TOURISM INDUSTRY
the sales/income and profit projections), payment track record, management system,
capability of the management to bail out the entity in case of distress, and the structure
and length of relationship with TFCI. While some subjectivity that may creep in while
evaluating these parameters, should be minimized.

Transaction Specific Risk/Security Risk

The risk parameters would be tenor of the facility, nature of the security, value of the
security and type of the charge over the security.

Fair Practices Code

This code has been developed:

• To promote good, fair and trustworthy practices by setting standards in dealing
with customers;

• To ensure transparency in the Company’s dealings with its customers;

• To ensure compliance with legal norms in matters relating to recovery of advances;

• To enable customers to have better understanding of what they can reasonably
expect of the services offered by the Company;

• To reckon with market forces, through competition and strive to achieve higher
operating standards;

• To strengthen mechanisms for redressal of customer grievances.

2.6 TOURISM POLICY IN INDIA:

In the early days of independent India, quite rational y, the Government didn’t pay
much attention to tourism. During the first fifty years of independent India the portion of
international tourists visiting India has not been more than 0.4%

The first public milestone in the history of tourism was the creation of the Indian Tourism

Development Corporation (ITDC), in 1966. This federal organization was meant to develop
tourist infrastructure and services.

• Tourism: 1980’s:

The first significant policy initiatives were forged in the early 1980s. With the prospect of
hosting the Asian Games of 1982, the Indian Government had to start thinking about
accommodating, transporting and entertaining the large number of visitors attracted by
the event. This awakened a serious public interest in tourism, which was enhanced by the

SECTION 2 – BUSINESS SCENARIO

37
fact that tourism was India’s largest net earner of foreign currency. The public interest was
translated into the Tourism Policy of 1982 which provided an action plan based on the
development of so-called tourism circuits (Singh, 2001: 143-44).10

In the 1980s, the growing public interest in tourism resulted in the recognition of tourism
as an export industry (including the implied tax exemptions) and the creation of a special
public tourism finance corporation (1987). These initiatives were thought to openly and
explicitly invite private investors and entrepreneurs to participate in tourism development.

• Tourism: 1990’s:

The Ministry of Civil Aviation and Tourism, Govt of India had framed an action plan for

Socio Economic Development of areas, increasing employment , developing domestic
tourism, preservation of national heritage, etc in 1991 for the next five years but most of
these plans remained within papers. In 2002, when the action plan was finally translated
into a tourism policy, the Tourism Policy officially became a joint central-state government
concern. The new policy itself, however, was designed by the Central Government. To a
large extent, it was like old wine in new bottles.

• Tourism Policy (2002):

In more practical terms, the policy aims at increasing the number of domestic and
international tourists. In order to do this, the government proposes to diversify the

Indian tourism product and substantially improve the quality of (tourism) infrastructure,
marketing, visa arrangements and air travel. The aforementioned tourism-as-a-
development-tool largely concerns domestic tourism, which in this capacity is
conceptual y linked to ‘sustainable’ rural development. As far as international tourism
is concerned the Indian Government mainly wants to target the ‘high-yielding variety’

of tourists.

According to the Indian Tour Operators Promotion Council (ITOPC), during the period 2001-

2006 the number of foreign tourists in India had nearly doubled (to some 4.4 million). It is
claimed to have risen to some 0.45% in 2004 (GOI 2004). In fact, since the independence
the budget outlays for tourism have always been very small (less than 0.2%).

Influencing public policy is one of the most important activities any industry would pursue.

Businesses, non-profit organizations and other groups in all industries attempt to influence
public policy with the intent to benefit their particular missions, goals and objectives. Since
this is true, tourism entities must have a clear awareness of policy in order to compete.

Understanding public policy, and how to influence it, is also critical as tourism continues to
increase in political, social and economic importance.

10. Singh, S. (2001) Indian Tourism: Policy, Performance and Pitfalls. in: Harrison, D. (ed.)

Tourism and the Less Developed World, Issues and Case Studies. Oxon: Cabi.

38

TOURISM INDUSTRY

The public policy process intimidates many tourism professionals. They often feel less
knowledgeable about the issues and are unclear how to approach members of the
government to discuss important issues11. By developing a strong base at the local level,
the tourism industry can facilitate a two-way communication process – informing local
issues to industry members, and to the political decision makers at the central level
informing the important policy issues affecting tourism and their communities.

The primary factor which one should always to maintain is to attract tourists and to develop
this industry can follow the diagram given below:

Fig-12: Tourism Development Cycle (Basic)

The positive implications for enhancing understanding of the need for tourism policy and
planning are tremendous. To that end, this study will be included in a range of scholarly
input, applying history to today’s situation and looking far into the future to provide a
solid foundation for tourism policy as the industry continues to progress with the help of
professionals like Company Secretaries and the like.

11. Hawkins, D. (1996). Investing in Human Resources: An Essential Sustainable Tourism

Development Strategy for the Middle East and North Africa Region. Presentation, Seminar
on Sustainable Tourism Development in the Middle East and North Africa, Amman, Jordan.

SECTION 2 – BUSINESS SCENARIO

39

Fig-13: Tourism Policy Development Process

By exploring the future of tourism in the context of tourism policy and planning yesterday
and today, we hope to offer current and future businesspersons, politicians, managers,
students and academics an insight into key international trends and issues12

We are confident that Ministry of Tourism, government tourism organizations like ITDC,
private bodies and professionals associated with this field will find, through this work,
informative areas assisting them in persevering in their efforts to build more prosperous,
just, equitable decision-making as far as this sector is concerned. The study can also be
the guiding force in framing the Tourism Policy analyzing the each and every component
affecting the sector.

12. Evans, J. (1993). Tourism Graduates: A Case of Over-Production. Tourism Management, August, 243–

246.

40

TOURISM INDUSTRY

2.7 ROAD AHEAD

India fares much better as a business destination due to its economic growth. It still remains
a highly price-competitive destination. The recent changes in its visa regime with the
introduction of visa on arrival can give a great boost to the international arrivals. This sector
has emerged as one of the key drivers of growth in India. The tourism industry in India is an
important employment generator and an important source of earning foreign exchange
for the country. It has a huge growth potential. India has great potential to benefit from
the reforms and infrastructural growth initiatives undertaken by the new government. The
major concerned areas as health and hygiene, security and safety of tourists should be
given more emphasis in the coming years. India is projected to be number one for the
growth in the wel ness tourism sector in the next five years. There are large areas which
need to be tapped from the tourists, point of view. The growth and development of the
tourism industry should be made more and more environmental friendly. According to
the World Travel and Tourism Council (WTTC), Indian tourism will be one of the most rapidly
growing industries in the world.

SECTION 3 – LEGAL FRAMEWORK

41

SECTION-3

LEGAL FRAMEWORK

3.1 LEGAL FRAMEWORK

To understand the Legal Framework of Travel and Tourism Industry one should have
understanding of the components involve with the industry itself. There are eight basic
components / sectors of Tourism Industry:

Figure-14: Travel & Tourism prime Components

• Accommodation: This is the most vital component of the tourism product and
the tourist destinations. There are approximately 65 hotels in Nassau, with 8,688
rooms. In The Bahamas there are 270 hotels with 14,797 rooms.

• Food & Beverage: This is the fastest growing sector in tourism.

• Adventure Tourism and Recreation: These include golf and tennis, outdoor
adventure and recreation; marine facilities and bone-fishing lodges.

• Transportation: This is a major component of tourism and is divided into three
categories: air, ground and water. Airlines are used by many tourists and are
national, regional or international. Ground transportation includes taxis, car rentals
and tour buses. Water transportation is done primarily by cruise lines and ferries.

• Attractions: Tourist attractions are natural (Preacher caves, blue holes; cultural

41

42

TOURISM INDUSTRY

(Junkanoo), heritage (historical buildings-Pompey Museum, forts, old churches, 66

Steps) leisure (casinos) or man-made (Atlantis Theme Park).

• Travel Trade: This as an important sector using wholesalers, tour operators and travel
agents who package the travel experiences. The packages consist of different
elements of the travel such as air and ground transportation, accommodation,
meals, entertainment as well as other activities.

• Events and Conferences: This sector is a major reason for travel and is classified
in the three groups, special events, meetings and conventions and trade shows.

• Tourism Services: The Ministry of Tourism works with strategic partners to organize
the tourism industry. It deals with marketing services, research and information
management, resource development. Services are provided by proprietors,
government agencies, quasi-government agencies and non-governmental
agencies (NGOs).

Applicability of Laws pertaining to any industry including Travel & Tourism be segregated
into two in fol owing ways:

Figure-14: Applicability of Laws: Travel & Tourism Industry

Legal framework on tourism helps one to understand the legal and regulatory framework
in the Travel and Tourism Sector. Broadly speaking the framework consists of following
segments

Figure-15: Travel & Tourism Legal Framework

3.2 Specific Laws Applicable to Travel & Tourism Industry

• Introduction to Legislation: Concept; Principles and role of legislation in tourism;

SECTION 3 – LEGAL FRAMEWORK

43

National Tourism Policy - objectives and consistency. Export procedures and
documentation- Legal Framework governing exports; Export documentation:

Mandatory Documents for Export- Commercial and regulatory Documents,

Multimodal Transport Documentation; Export incentives-EPCG, Duty drawbacks,
duty exemption schemes, tax incentives; Procedures and documentation for
availing incentives ;Trading Houses-Export and trading houses schemes – criteria,
procedures and documentation; Policy and procedures for EOU/FTZ/EPZ/SEZ units ,

Inco terms and its usage. Import procedure and documentation- Types of Imports,

Need for Licensing, Types of Licensing, Import Procedures and Documentation

• Legal and Regulatory Framework in Travel and Tourism: Relating to consumer
protection; health; safety and security of travel and tourism customers. Legal

Liability and Risk Management: Legal liability concepts; owner and director
liability; guide and leader liability; risk assessment and controlling; risk mitigation;
risk financing and insurance.

• Transport Legislation: Surface; sea and air transport laws in relation to carriage of
passengers.

• Contract legislation in relation to Travel and Tourism customers: Contract Act &

Partnership Act ; Sale of goods Act, Consumer Protection Act & Companies Act :

• Business Ethics in Travel and Tourism Sector: CSR policy for travel and tourism
businesses; corporate responsibility to shareholders versus stakeholders; personal
versus social responsibility; stakeholder theory; determinants of social Responsibility
of individuals and social groups; role of governance system. Emergence of
corporate governance code; development of corporate governance code;
development of Indian corporate governance.

Legislative Aspects of HRM:

• Trade Unions Act- 1926

• Industrial Disputes Act- 1947

• Disciplinary Procedure – Payment of Wages Act- 1936 – Employees Provident

Fund Act- 1952 – Payment of Bonus Act- 1965 - Payment of Gratuity Act- 1972.

Forex Management:

To acquaint with foreign exchange markets and management in order to operate in an
increasingly global business scenario: Regulation and Management of foreign exchange:

FEMA - realization and repatriation of foreign exchange; Foreign Exchange Rules in India.

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TOURISM INDUSTRY

Legal Aspects of Medical Tourism:

Certification and Accreditation in Health and Medical Tourism, Ethical, Legal, Economic
and Environmental issues in Health and Medical Tourism. Role of the National Accreditation

Board for Hospitals & Healthcare (NABH) and Joint Commission International (JCI).

Shipping (Cargo) Regulations:

Merchant Shipping Carriage of Cargo Rules, 1995 – Understanding the role of the Director

General of Shipping, Commerce and Customs in the Implementation of National Law
like the Merchant Shipping Act Indian COGSA. Multi model Transportation goods act,

Customs act, National foreign trade policy International Conventions / regulations and
codes relating to - Bulk cargo – Customs procedures (Unified Customs Protocol),

Dangerous Goods and Live Animal Regulations:

Growing international trade calls for an understanding of dangerous goods and live
animal regulations. Study of dangerous goods and live animal regulations is required for
safe transportation of dead loads.

(A) Dangerous goods regulations – Manual (IATA)

(B) Live Animal Regulations – Manual (IATA)

Event Laws & Permissions:

Permissions required for holding an event, general details, police permissions, traffic police,
ambulance, fire brigade, municipal corporation, Indian Performing Rights Society(IPRS),

Phonographic Performing License, Entertainment Tax, Permissions for open ground events,
license for serving liquor.

Law relating to Management of Tourism in Tribal Areas:

Legal Issues of Tribes in India

• Role and functions of ICPB and ICCA.

• Roles and functions, of UFTAA, ASTA, TAAI, IATO, ATAOI, ADTOI, IAAI, FIYTO, TAFI

• Organization of importance- ASI, UNESCO, INTACH, ICCROM, ITRHD; Heritage of

National importance- UNSECO World Heritage Sites in India

• National and International Organizations (ATTA, UIAA, IMF, ATOAI, PADI, WPGA etc),
its code of conducts.

Setting up Travel Agency & Tour Operation Unit:

Essential Requirements for Starting Travel Agency & Tour Operation Business, Cost

Management, Procedures for Obtaining Recognition.

SECTION 3 – LEGAL FRAMEWORK

45

3.2.1 Ministry of Tourism, Government of India (GoI):

The Ministry of Tourism is the nodal agency for the formulation of National Policies and
programmes and for the coordination of activities of various Central Government

Agencies, State Governments/UTs and the Private Sector for the development and
promotion of tourism in the country. This Ministry is headed by the Union Minister of State
for Tourism (Independent Charge).

The administrative head of the Ministry is the Secretary (Tourism). The Secretary also
acts as the Director General (DG) Tourism. The office of the Director General of Tourism

{now merged with the office of Secretary (Tourism)} provides executive directions for the
implementation of various policies and programmes. Directorate General of Tourism has
a field formation of 20 offices within the country and 14 offices abroad and one sub-
ordinate office/project i.e. Indian Institute of Skiing and Mountaineering (I SM)/ Gulmarg

Winter Sports Project. The overseas offices are primarily responsible for tourism promotion
and marketing in their respective areas and the field offices in India are responsible for
providing information service to tourists and to monitor the progress of field projects.The
activities of IISM/GWSP have now been revived and various Ski and other courses are
being conducted in the J&K val ey.

The Ministry of Tourism has under its charge a public sector undertaking, the India Tourism

Development Corporation and the following autonomous institutions:

• Indian Institute of Tourism and Travel Management (IITTM) and National Institute of

Water Sports (NIWS)

• National Council for Hotel Management and Catering Technology (NCHMCT) and
the Institutes of Hotel Management.

As mentioned the Ministry of Tourism functions as the nodal agency for the development of
tourism in the country. It plays a crucial role in coordinating and supplementing the efforts
of the State/Union Territory Governments, catalyzing private investment, strengthening
promotional and marketing efforts and in providing trained manpower resources.

As a nodal agency this Ministry formulate national policies and programmes for
the development and promotion of tourism. In the process, the Ministry consults and
collaborates with other stakeholders in the sector including various Central Ministries/
agencies, the State Governments/ Union Territory Administrations and the representatives
of the private sectors.

3.2.2 India Tourism Development Corporation Limited (ITDC)

ITDC came into existence in October 1966 and has been the prime mover in the
progressive development, promotion and expansion of tourism in the country. Broadly,
the main objectives of the Corporation are:

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TOURISM INDUSTRY

• To construct, take over and manage existing hotels and market hotels, Beach

Resorts, Travellers’ Lodges/Restaurants;

• To provide transport, entertainment, shopping and conventional services;

• To produce, distribute, tourist publicity material;

• To render consultancy-cum-managerial services in India and abroad;

• To carry on the business as Full-Fledged Money Changers (FFMC), restricted
money changers etc;

• To provide innovating, dependable and value for money solutions to the needs of
tourism development and engineering industry including providing consultancy
and project implementation.

The authorized capital of the Corporation is Rs 75 crores and the paid up capital as on

31.3.2005 was Rs 67.52 crores. 89.9748% of the paid up equity capital of the Corporation
is held in the name of President of India. The Corporation is running hotels, restaurants at
various places for tourists, besides providing transport facilities. In addition, the Corporation
is engaged in production, distribution and sale of tourist publicity literature and providing
entertainment and duty free shopping facilities to the tourists. The Corporation has
diversified into new avenues/innovative services like Full-Fledged Money Changer (FFMC)

services, engineering related consultancy services etc. The Ashok Institute of Hospitality &

Tourism Management of the Corporation imparts training and education in the field of
tourism and hospitality.

Presently, ITDC has a network of eight Ashok Group of Hotels, six Joint Venture Hotels,

2 Restaurants (including one Airport Restaurant), 12 Transport Units, one Tourist Service

Station, 37 Duty Free Shops at International as wel as Domestic Customs Airports, one Tax

Free outlet and two Sound & Light Shows.

Besides, ITDC is also managing a hotel at Bharatpur and a restaurant at Kosi on behalf of
the Department of Tourism. In addition, it is also managing catering services at Western

Court, Vigyan Bhawan, Hyderabad House and National Media Press Centre at Shastri

Bhawan, New Delhi.

The Ministry of Tourism itself has a scheme for granting approval to hotel projects from the
point of view of this suitability for international tourists. A classification committee set up by
the Ministry classifies the functioning hotels under the star system into six categories from
star one to five star deluxe. Similarly, the Ministry has a scheme of approving Travel Agents,

Tour Operators, Adventure Tour Operators and Tourist Transport Operators; the idea being to
encourage quality, standard and service in these categories so as to promote Tourism in

India. This is a voluntary scheme open to al bonafide agencies. Some of these are as fol ows:

SECTION 3 – LEGAL FRAMEWORK

47

Travel Agents: A Travel Agent is one who makes arrangements of tickets for the travel by
air, rail, ship, passport, visa, etc. It may also arrange accommodation, tours, entertainment
and other tourism related activities.

Inbound Tour Operator: An inbound tour operator is one who makes arrangements for
transport, accommodation, sightseeing, entertainment and other tourist related activities.

Tourist Transport Operator: A tourist transport operator organization is one, who provides
tourist transport like cars, coaches, boats, etc. to tourist for transfer, sightseeing, and
journey to tourist places, etc.

Adventure Tour Operator: An adventure Tour Operator is one who is engaged in activities
related to adventure tourism in India, namely water sports, aero sports, mountaineering,
trekking, and safari of various kinds etc. in addition to that he may also make arrangements
for transports, accommodation, etc.

The Ministry has to maintain a strong liaison with the executional / functional arms which
are as under:

1. Archaeological Survey of India (ASI),

2. India Tourism Development Corporation (ITDC),

3. India Convention Promotion Bureau (ICPB),

4. Port Trust of India,

5. Tourism Finance Corporation of India (TFCI),

6. Experience India Society, etc.

Apart from above Ministry of Tourism is in constant dialogue with Industry associations
namely:

1. Federation of Indian Chambers of Commerce and Industry (FICCI),

2. PHD Chamber of Commerce & Industry (PHDCCI),

3. Associated Chambers of Commerce & Industry of India (ASSOCHAM),

4. Confederation of Indian Industry (CI ),

5. Travel Agents Association of India (TAAI),

6. Indian Association of Tour Operators (IATO),

7. Indian Tourist Transport Association (ITTA),

8. Association of Domestic Tour Operators of India (ADTOI),

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TOURISM INDUSTRY

9. Adventure Tour Operators of India (ATOI), Federation of Hotel & Restaurant

Association of India (FHRAI),

10. Hotel Association of India (HAI),

11. Indian Heritage Hotel Association (IHHA),

12. Federation of Associations of Indian Tourism and Hospitality (FAITH), and

13. All India Resort Development Association (AIRDA)”, etc.

3.3 General Laws Applicable to Travel & Tourism Industry

The Tourism Industry has to comply with a gamut of laws not confined within the Sector
itself but the laws within the jurisdiction of other ministries. The sustainability and success of

Tourism Industry is purely dependent on other ministries such as:

1. Ministry of Culture,

2. Ministry of Civil Aviation,

3. Ministry of Urban Development,

4. Ministry of Road Transport & Highways, Railways, etc. and

5. Various State/Union Territory Governments.

3.3.1 Laws pertaining to Ministry of Culture:

The Ministry of Culture is the vast repository of Indian heritage in which Tourism Industry is
highly depending on. For example, the National Archives of India is the custodian of the
records of enduring value of the Government of India. Established on 11 March 1891 at

Calcutta (Kolkata) as the Imperial Records Department, the National Archives of India
is the custodian of the records of enduring value. It is the biggest archival repository in

South Asia. Therefore, the professional dealing with the Tourism Industry must have to be
acquainted with the following Laws which determine the success of Tourism Industry,

• The Treasure Trove Act, 1878

• The Ancient Monuments Preservation Act, 1904

• The Ancient Monuments and Archaeological Sites Remains Act, 1958

• The Ancient Monuments and Archaeological Sites Remains Rules, 1959

• The Antiquities and Art Treasures Act, 1972

• The Antiquities and Art Treasures Rules, 1973

SECTION 3 – LEGAL FRAMEWORK

49

3.3.2 Laws Pertaining to Ministry of Civil Aviation Civil Aviation:

The Ministry of Civil Aviation of Government of India is the nodal Ministry responsible for
the formulation of national policies and programmes for development and regulation
of Civil Aviation and for devising and implementing schemes for the orderly growth and
expansion of civil air transport. Its functions also extend to overseeing airport facilities, air
traffic services and carriage of passengers and goods by air. The professional associated
with Tourism Industry should know the genesis of following laws to address the issue related
to Domestic and International Tourists.

• The Anti-Hijacking Act, 2016

• Tokyo Convention Act, 1975

• The Foreign Aircraft Exemption from Taxes and Duties on Fuel and Lubricants Act,

2002

• The Airports Economic Regulatory Authority of India Act, 2008

3.3.3 Laws pertaining to Ministry of Urban Development:

The Ministry of Housing and Urban Affairs (MoHUA), Government of India, is the apex body
for formulation and administration of the rules and regulations and laws relating to the
housing and urban development in India.

• The Real Estate Act 2016

• The Street Vendors Act 2014

3.3.4 Laws pertaining to Ministry of Road Transport & Highways, Railways, etc.:

The Ministry of Road Transport and Highways is the apex body for the formulation and
administration of the rules, regulations and laws relating to road transport, and transport
research in order to increase the mobility and efficiency of the road transport system
in India. Road transport is a critical infrastructure for economic development of the
country. It influences the pace, structure and pattern of development. In India, roads are
used to transport over 60% of the total goods and 85% of the passenger traffic. Hence,
development of this sector is of paramount importance for the India and accounts for
a significant part in the budget. The growth of Tourism Industry is purely dependent on
this Ministry. Therefore the professional associated with this sector have to know the laws
applicable to the Ministry of Road Transport & Highways.

• The Carriage by Road Act, 2007 and Rules

• The Control of National Highways (Land and Traffic) Act, 2002

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TOURISM INDUSTRY

• The Central Road Fund Act, 2000 and Rules

• National Highways Fee (Determination of Rates and Collection) Rules

• Notifications on National Highways

• National Highways Tribunal Rules

• The National Highways Authority of India (Amendment) Act, 2013

• The National Highways Authority of India Act 1988

• Notifications regarding Automotive Industry Standards

• National Highways Rules 1957

• The National Highways Act, 1956

• The Road Transport Corporations Act, 1950

3.4 Recent Initiative of Ministry of Tourism and the Outcome thereon:

Tourism Sector13 : Tourism in India has witnessed steady growth over the past few years,
aided by the rising purchasing power of the expanding middle class and the shift from
foreign to domestic tourism. The Travel & Tourism industry has been a major contributor
to the economic growth of the Country. It is fundamental in creating employment and
generating income for both skilled and unskil ed labour. The industry contributed 9.3%
of the total employment (both direct and indirect) in 2016. The industry is expected to
generate 13.45 million jobs across sub-segments such as Restaurants (10.49 million
jobs), Hotels (2.3 million jobs) and Travel Agents/Tour Operators (0.66 million). The Ministry
of Tourism proposes to help the industry meet the increasing demand of skilled and
trained manpower by providing hospitality education to students as well as certifying and
upgrading skills of existing service providers.

India’s Travel & Tourism sector has also been the fastest growing among the G20 countries,
growing by 8.5% in 2016. Govt. has also made serious efforts to boost investments in
the tourism sector by allowing 100% FDI through the automatic route. The Tourism and

Hospitality Sector is among the top 10 sectors in India to attract the highest Foreign

Direct Investment (FDI). During the period April 2000- March 2017, the Hotel and Tourism

Sector attracted around US$ 10.14 billion of FDI, according to the data released by the

Department of Industrial Policy and Promotion (DIPP). As per industry experts, mid-hotel
segment in India is expected to receive investments of Rs 6,600 crore (US$ 990 million)

excluding land over next five years, with major hotel chains like Marriott, Carlson Rezidor
and ITC planning to set up upscale, budget hotels in state capitals and tier-II cities.

13. http://www.tfciltd.com/CorporatePolicy/CREDITPOLICY2018-19.pdf

SECTION 3 – LEGAL FRAMEWORK

51

While an assortment of influences had repressed the Indian hospitality sector’s endeavours
to grow from 2009 to 2016, the sector has finally woken up after a longish nap. During

2017, the nationwide occupancy was the highest since 2008, countrywide average room
rates (ARRs) clocked a clear and measurable increase over several preceding years and
the overall supply-demand scale is now tilted squarely in favour of growth in demand
outpacing new supply. The country for the first time witnessed 10 million foreign tourist
arrivals in 2017. The rising purchasing power of the Indian middle class has aided the
exponential growth of domestic tourism, and helped in narrowing the gap between lean
and peak seasons. Further, today’s discerning travellers do not shy away from spending
on upscale or luxury hotels in such destinations. The hospitality industry is now in its second
year of the much-awaited up-cycle and, it is time for industry stakeholders and investors
to grab the opportunity and boost their performance. The markets are looking strong; the
proposed supply is minimal and, demand is more than likely to continue growing.

As per HVS Survey-2017, the expected future additional inventory in 11 major markets

(across categories-only branded) is lower at around 57,000 rooms for the next 5 years.

Therefore, with increasing demand on the back of improvement in economic activities
and lower room additions, major markets are expected to sustain/improve the ARRs going
forward and grow at an average of 4.5% p.a. Also, the occupancy is expected to inch
up to an average of about 66% by the end of FY 21 as compared as with 63.4% in FY16.

Accordingly, the hotel industry is expected to see an increase in revenue at the rate of
about 11-13% CAGR over the 5 year period FY 17-FY 21.

GST Implications on Hotel Industry:

Notably, the much-awaited GST was rolled out on 1st July 2017, under which the Indian
hospitality industry stands to benefit from homogeneous and uniform taxes, in addition to
easy utilization of Input Tax Credit (ITC). Hotels having centralized registration will have to
get registered in each state whether providing hotel services on own account or through
an agent (franchise). The GST Council decided that the 28% tax would be imposed on
hotel rooms with a tariff of Rs 7,500 and above. Rooms with tariffs between Rs 2,500 and

Rs 7,500 shall attract 18% tax rate. Under GST regime, the overall tariffs for premium hotels

(four star and above) have seen an increase, which has impacted the demand, though
marginally.

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SECTION-4

CONTRIBUTION OF COMPANY SECRETARY

In the light of Economic Developments in recent years stakeholders of companies,
particularly in the services sector, are increasingly concerned with the conduct of the
affairs of the company and therefore it is essential that best practice is adhered to at all
times and evidence is available to demonstrate the same. The requirement for higher
standards in Tourism Industry can be further evidenced by the Ministry of Tourism and
other Global Regulatory Bodies by introducing a series of corporate governance codes
including fitness and probity standards for certain pre-approval control ed functions
or persons who perform controlled functions. Controlled functions include “ensuring,
controlling or monitoring compliance by a regulated service provider with its relevant
obligations.

Therefore, the role of Company Secretaries in Employment may be presented as per the
fol owing diagram:

Fig: 7: Role: Company Secretary

While the monitoring of compliance in the services sector has traditionally been outsourced
with the introduction of these new standards there is more caution in the provision of
such services which are in the future more likely to be laid at the feet of the Company

Secretary. It is true to say that the role of the Company Secretary also includes keeping

52

SECTION 4 – ROLE OF COMPANY SECRETARY

53
the Board informed of new legislation and how it applies to them. With this increased
focus on corporate governance, the role of the Company Secretary has been extended
such that the secretary is now seen as the guardian of the company’s compliance with
legislative requirements and best practice.

4.1 PRIMARY ROLE

As far as Tourism Industry is concerned a Company Secretary primarily has to perform the
fol owing role:

Governance and Regulatory Compliance:

• Review al corporate governance arrangements or developments which might
impact the Board.

• Ensure that the Board is fully briefed on all governance matters.

• Provide advice and guidance to the Board on al matters of governance, statutory
requirements, laws, regulations risk, compliance, duties and responsibilities.

• Monitor changes in relevant legislation and advice the Board

• Ensure that board and management remains compliant with applicable
standards of corporate governance and has the necessary infrastructure to
support the governance rationale and governance framework.

• Develop and oversee the systems that ensure the company complies with all
applicable codes, in addition to its legal and statutory requirements.

• Manage and compile content of the governance report of the Annual Report

• Ensure implementation of board deliverables as agreed with the shareholder.

Board and Committee Administrative Support:

• Convene meetings in compliance with regulatory requirements, including notice
of meetings, agenda-preparing meeting packs, dissemination of information,
coordinating attendance at meetings and minute-taking, etc.

• Ensure company policies are kept current and approved, and that company
members are aware of their implications.

• Deal with correspondence, collating information and writing reports, ensure
decisions made and actions from meetings are communicated to the relevant
company stakeholders.

• Positively support the implementation of all board, committee and CEO decisions.

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TOURISM INDUSTRY

Company Records and Policy Maintenance:

• Oversee the storage, maintenance, and retrieval of corporate documents to
ensure secure access and safe-keeping.

• Review meeting-materials prior to presentation, and ensure compliance with the
company’s document retention policy.

• Establish and maintain relationships with key stakeholders, Board, Committee

Members, external regulators and advisors.

• Communicate and engage relevant stakeholders on directions and decisions
taken by the business.

• Policy and charter maintenance, compilation and implementation.

In Tourism Industry, Management of Human Resources is very important. A Company

Secretary may become the guiding force in Human Resources Management like

Advising on Industrial and Labour Laws; Manpower planning and development;

Performance appraisal; Renumeration Strategies following the applicable laws of
land; Audit of the HR function; Office Management, Work Studies and Performance
standards; Maintaining Industrial relations; Preparation of Project Reports and Attaining

Cultural Integration.

In exercise of the powers conferred by section 410 of the Companies Act, 2013, the

Central Government hereby constitutes the National Company Law Appel ate Tribunal
for hearing appeals against the orders of the National Company Law Tribunal with effect
from the 1st day of June, 2016. Establishment of NCLT/NCLAT shal offer various following
opportunities to Practicing Company Secretaries as they have been authorized to appear
before the Tribunal/ Appellate tribunal:

• Compromise and arrangement,

• Sick companies,

• Winding up, (only Notified sections)

• Reduction of capital, etc.

• Act as Company representative in all other related matters.

4.2 OPPORTUNITIES OF COMPANY SECRETARY (IN PRACTICE) IN GLOBAL LEGAL

PLATFORM WITH REFERENCE TO TOURISM INDUSTRY

Now-a-days the Practicing Company Secretaries are taking a lead role as Counsel of
various Corporates to appear before the other Quasi-judicial Bodies such as Competition

SECTION 4 – ROLE OF COMPANY SECRETARY

55

Commission of India, Securities Appel ate Tribunal, Registrar of Companies, Consumer

Forums, Telecom Disputes Settlement and Appel ate Tribunal Tax Tribunals, etc.

A Company Secretary may contribute significantly in Arbitration and Conciliation

Services like Advising on arbitration, negotiation and conciliation in commercial disputes
between the parties; Acting as Arbitrator Conciliator in Domestic and International

Commercial disputes; Drafting Arbitration Conciliation Agreement / Clause.

As an advisor / Consultant a Company Secretary is competent to provide Financial

Market Services to the Tourism Industry in the area of Public Issue, Listing and Securities

Management in issue of shares and other securities in India and abroad, Listing /

De-Listing of securities; private placement of securities; Buy-back of shares; Raising
of Funds from International Markets – ADR / GDR / ECB; Acting as Compliance Officer
under Listing Agreement; Compliance Officer for various Capital Market Intermediaries.

The Travel & Tourism Industry is not confined within a defined geographical parameter.

The growth of the sector only be possible once it connects with the every corner of
the world.

Therefore the Company Secretary is competent to widely contribute in International

Trade and World Trade Organization Services like Advising on all matters related to IPRs
and TRIPs Agreement of WTO, Anti – dumping, safeguard duties and countervailing
duties; International Commercial Arbitration; Foreign Trade Policy and Procedures;

Intellectual Property Licensing and drafting of Agreement; Acting as Registered Trade

Mark Agent of al industrial Sectors including Tourism

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TOURISM INDUSTRY

Being the Service Industry the success of Tourism sector depends upon absolute utilization
of Information Technology. Information Technology services like Advising on IT related IPR;

Maintaining Statutory Records in electronic from; E-filling of Forms / Documents; Compliance
with Cyber Laws and Conducting Board Meetings through Video – Conferencing and

Tele-Conferencing, Company Secretary is the best Professional to handle al these.

United Nations World Tourism Organization issued the Global Code of Ethics for Tourism
in 1999 (the “Code”). This noteworthy document is increasingly becoming known by the
international community, especially by stakeholders active in the tourism sector. Moreover,
its recognition was further legitimized by the endorsement of the United Nations General

Assembly14. Although the Code explicitly holds itself as a voluntary instrument, it is now
significantly implemented by countries all over the world, which raises the interesting
question of its legal status.

The Global Code of Ethics for Tourism merits further discussion also because it
introduces a dispute settlement mechanism. Article 10(3) of the Code states:

“The same stakeholders should demonstrate their intention to refer to any dispute
concerning the application or interpretation of the Global Code of Ethics for Tourism
for conciliation to an impartial third body known as the World Committee on Tourism

Ethics.”15 Hence, the Global Code of Ethics for Tourism creates a World Committee on

Tourism Ethics (the “World Committee”), and furthermore, it lays down procedural rules
for the settlement of disputes.

The Global Code of Ethics for Tourism contains the following (See Annexure-1 for
details):16

Article 1 : Tourism’s contribution to mutual understanding and respect between peoples
and societies.

Article 2 : Tourism as a vehicle for individual and collective fulfilment.

Article 3 : Tourism, a factor of sustainable development.

14. G.A. Res. 56/212, U.N. Doc. A/RES/56/212 (Feb. 28, 2002), available at http://ethics.unwto.org/ sites/all/
files/docpdf/unresolutiona-res-56-2122001.pdf. See also Note by the Secretary- General, Implementation
of the Global Code of Ethics for Tourism, U.N. Doc. A/65/275, ¶ 3 (Aug. 10, 2010), available at http://
ethics.unwto.org/sites/al /files/docpdf/unga2010status reportgceta-65-275en.pdf (Report of the UNWTO
submitted via the UN Secretary-General to the UN General Assembly concerning the implementation
of the Global Code of Ethics for Tourism) [hereinafter Implementation of the Global Code of Ethics for

Tourism].

15. World Tourism Organization, Global Code of Ethics for Tourism, WTO G.A. Res. A/RES/406(XII ), 13th Sess.,

Sept. 27–Oct. 1, 1999, art. 10(3) (Oct. 1, 1999), available at http://ethics.unwto.org/ sites/al /files/docpdf/
unwtoresolutiona-res-406xiii1999.pdf [hereinafter Global Code of Ethics for Tourism]

16. Global Code of Ethics for Tourism, UNITED NATIONS WORLD TOURISM ORGANIZATION, http://ethics.

unwto.org/en/content/global-code-ethics-tourism (last visited Apr. 7, 2015).

SECTION 4 – ROLE OF COMPANY SECRETARY

57

Article 4 : Tourism, a user of the cultural heritage of mankind and a contributor to its enhancement.

Article 5 : Tourism, a beneficial activity for host countries and communities.

Article 6 : Obligations of stakeholders in tourism development.

Article 7 : Right to tourism.

Article 8 : Liberty of tourist movements.

Article 9 : Rights of the workers and entrepreneurs in the tourism industry.

Article 10 : Implementation of the principles of the Global Code of Ethics for Tourism.

The Global Code of Ethics for Tourism contains nine principles summarized in the ten
articles mentioned above. To some extent, the articles have a rather idealistic tone and
are clearly addressed at the wide stakeholder community involved in tourism activities.17

For example, Article 7 even refers to a “universal right to tourism,” which “must be regarded
as the corollary of the right to rest and leisure, including reasonable limitation of working
hours and periodic holidays with pay, guaranteed by Article 24 of the Universal Declaration
of Human Rights and Article 7d of the International Covenant on Economic, Social and

Cultural Rights.”

The World Committee on Tourism Ethics was mentioned at the creation of the Global

Code of Ethics for Tourism in Santiago in 1999, and was also authorized to establish its
own Rules of Procedure.18 The task of the Committee to settle a dispute by conciliation is
an important one. It is stipulated in the Global Code of Ethics for Tourism, which states that

“[t]he same stakeholders demonstrate their intention to refer any disputes concerning the
application or interpretation of the Global Code of Ethics for Tourism for Conciliation to an
impartial third body known as the World Committee on Tourism Ethics.”19

In the event of a dispute concerning the interpretation or application of the Global Code
of Ethics for Tourism, two or more stakeholders in tourism development may jointly submit
the matter of such a dispute (hereinafter “the matter”) to the World Committee on Tourism

Ethics (“the Committee”) as the body of the World Tourism Organization competent to
settle such questions.20

17. Implementation of the Global Code of Ethics for Tourism, supra note 2, § 50 (“The nine principles
set forth in the Code provide clear guidelines and recommendations that are both policy-driven and
action-oriented for all tourism stakeholders, while the tenth is monitored and administered by the World

Committee on Tourism Ethics.”).

18. Global Code of Ethics for Tourism, supra note 19, ¶ 3 (see the annex protocol of implementation).

19. Global Code of Ethics for Tourism, supra note 3, art. 10(3).

20. Procedures for Consultation and Conciliation, supra note 131, ¶ 1, at 2 (footnote omitted).

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TOURISM INDUSTRY

The term ‘stakeholders’ mentioned above has been explained in the Consultation and

Conciliation Procedure, as fol ows:

For the purpose of the Code, the term “stakeholders in tourism development” includes:

national governments; local governments with specific competence in tourism matters;
tourism establishments and tourism enterprises, including their associations; institutions
engaged in financing tourism projects; tourism employees, tourism professionals and
tourism consultants; trade unions of tourism employees; travellers, including business
travel ers, and visitors to tourist destinations, sites and attractions; local populations and
host communities at tourist destinations through their representatives; other juridical and
natural persons having stakes in tourism development including non-governmental
organizations specializing in tourism and directly involved in tourism projects and the
supply of tourism services.

4.3 ROLE OF COMPANY SECRETARY AT GLOBAL PLATFORM (GENERAL):

Company Secretaries may provide following services for Travel and Tourism Industry
at Global platform:

Merger and Acquisition Services (including Buying and sel ing of serves in every country in
the world); Global Trademark Registration ; Stock Exchange Listing Services in any Country of
the World; E-commerce Business Solutions (including feasibility Study to set up Business); Cash

Flow Improvement Services ( such as How to Improve Services, Sales or How to minimize cost,
working capital cycle, etc); Country Comparison Services (to find best place to set up business
with Low Tax/Tax Free State, Zero Tax Countries, Free Trade Zone, etc.)

Merger and Acquisition

Services (including Buying
and selling of serves in every
country in the World

Global Trademark

Country Comparison Services (to

Registration
find best place to set up business
with Low Tax/Tax Free State, Zero

Tax Countries, Free Trade Zone,
etc.)

Cash Flow Improvement

Company

Services (such as How to

Secretary

Improve Services, Sales or

Stock Exchange Listing Services

How to minimise cost, working
capital Cycle, etc)

in any Country of the World

E-commerce Business

Solutions (including feasibility

Study to set up Business)

Al the areas as mentioned above add considerable value to a business, but making sure

SECTION 4 – ROLE OF COMPANY SECRETARY

59
that each stage of the transaction process from valuation to negotiation and completion
is successful demands considerable experience and knowledge. Being Governance

Professional Company Secretaries therefore, can play a significant role. The global
economy means that these opportunities can arise anywhere in the world. The global
reach means that we, the Company Secretaries, can provide services on the ground
wherever the clients need them.

4.4 SUGGESTIONS TO MINISTRY OF TOURISM (MOT) TO BOOST INDIAN TOURISM:

A. Implementing Whistle-blowing Mechanism

Purpose & Scope

The different Stakeholders of Travel & Tourism should have the opportunity to report their
concerns within the Ministry of Tourism relating to il egal conduct, conflicts of interest,
unscrupulous activities or other malpractices that are against public interest, a breach of
laws or regulations locally or overseas.

Therefore, the Ministry of Tourism may structure a whistle-blowing framework, through
which the following parties may report concerns without any fear of reprisal to the ministry
for necessary action with the conformity that the identity of the whistle-blower will be
protected and kept utmost confidential.

a. Officers in the Board;

b. Vendors or contractors dealing with officers an the Board under the procurement
process;

c. Stakeholders; or

d. The general public.

These parties may report concerns within the Board relating to illegal conduct, conflicts of
interests, unscrupulous activities or other malpractices that are against public interest, a
breach of laws or regulations locally or overseas.

B. Other Suggestions

1. To take support and expertise from the Professionals like Company Secretaries to
design Ling Term Planning and Legal Compliances.

2. To provide for effective marketing and advertisement of India as a global tourist
destination through promotional campaigns that project the Country as a whole
and not merely a combination of states.

3. Proper transportation facilities: Families from different strata need facilities like

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TOURISM INDUSTRY
bus, cars, and trains to approach their favourite destinations. Major distances
are covered by trains or planes. Sufficient transport facilities exist and additional
facilities can be made for the same based on the individual’s requirements. India’s
transportation system is also in need of a serious overhaul. Although cars and
trucks traverse India’s roads, laws for operating vehicles are widely ignored. Often
the result is pure chaos, as cars, trucks, bicycles and rickshaws drive opposing
traffic rules and ignore traffic lights to get where they need to go. Fatal car and
truck accidents are not uncommon. For a tourist visiting India, the experience of
traveling along India’s lawless roadways can induce cardiac arrest. While India also
has an extensive railway system, due to overcrowding and poor maintenance,
this mode of transportation is not comfortable. Trains are frequently so crowded
that people sit on the roofs of the moving trains or hang out of the windows. While
a rare breed of adventurous tourist may find traveling on India’s trains exciting,
the majority of tourists might find using India’s railways highly inconvenient. India
needs to enforce its traffic laws and reduce overcrowding in trains so that visiting
tourists have an easier time traveling from place to place.

4. Proper accommodation facility: While an international tourist is in India he/she
needs to be provided with good quality accommodation at reasonable prices in
nearby localities of tourist spots.

5. The educational nature of heritage sites should not be forgotten. Theatres showing
educational videos about the heritage site and its history should be available and
the price cost should be included in the tour costs.

6. Food and restaurants: Food and restaurants are required at tourist sites. The
restaurants should be able to serve a variety of global cuisines to suit all tastes;
there can be a little stress on local food and flavours. Restaurants should be able
to supply mineral water to the health-conscious tourist of the day.

7. Adequate and hygienic toilets, bathrooms and urinal facilities are required at the
heritage sites. These facilities also need maintenance and they should be clean
and odour file.

8. Primary Health Care: Every tourist spot should be equipped with a primary
healthcare centres to provide first aid and amenities to minimize stress and get
some relief, from fatigue.

9. Handicraft and local crafts sales facilities: A tour is probably a time when the
tourist is brought close to local handicrafts and local craftsmen. Adequate space
for having shops to sell Indian handicrafts, garments and traditional items must be
provided.

10. Amusement Parks and secondary entertainment facilities: Now-a-days the tourists

SECTION 4 – ROLE OF COMPANY SECRETARY

61
want to enjoy more and that too by spending least of their time. This opportunity
can be availed by the Ministry of Tourism by building good amusement parks
and shopping complexes near the famous tourist spots. .It will not only promote
tourism but also lead to employment generation for a large number of people.

11. Bank and ATM facilities: Most tourist locations require Bank and ATM facilities.

Nationalized banks can be directed to provide ATM facilities nearby heritage/
tourist sites.

12. Persons performing unclean acts can be fined for such purposes. Indian tourism
department should frame surveillance and penal code that should authorize
the specific persons at respective tourist spots to impose and collect penalties
and fines from those who damage the tourist spots or make the environment
clean.

13. Incentive to explore the heritage: The government of India is recommended to
design such tourism packages which cover a large number of tourist spots at
discounted prices. It will provide an incentive to the tourists to visit more tourist
places in a single visit to India. It will help in the flourishing of tourism industry.

14. Another issue with an adverse effect on India’s tourism is its widespread
environmental pollution. Air quality throughout India is notoriously bad, since there
are no curbs on emissions and law enforcement to prevent gross polluters. Most
days, the air in big cities such as Mumbai has a red tinge to it, causing watery
eyes and cough. Respiratory infections are common, especially among sensitive
individuals or those suffering from allergies. Additionally, air pollution is beginning to
show its effects on prominent tourist landmarks, such as Agra’s Taj Mahal. In recent
years, toxic air has damaged the ancient marble of the monument, jeopardizing
its beauty and requiring significant repair. Measures should therefore be initiated
for strict enforcement of provisions of Environmental Protection Act and the latest
amendments made therein.

15. As India’s population grows, forests are cleared to make room for more housing
and development. The destruction of these forests leads to a loss of habitat for
many of India’s famed fauna, such as Bengal tigers, Asian elephants and Indian
ring-neck parrots. If India does not make greater efforts to reduce this loss of
habitat, tourists searching for safari like encounters with the animals made famous
in Rudyard Kipling’s “Jungle Book” wil be out of luck. India needs to preserve
ecotourism by protecting its forests and the animals that inhabit them.

16. India’s Government should be cognizant of the different types of tourists who may
want to visit India tourists, history buffs or those seeking meditative retreats. India

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TOURISM INDUSTRY
should take advantage of the West’s intrigue with Indian culture, including yoga,
ayurvedic medicine, Hinduism and meditation, and market herself accordingly.

17. Coastal development: Development of coastlines and management of
water resources will give a new impetus to tourism, tremendous boost to the
development of flora and fauna and multiply our domestic and export income
through sea food, fisheries and a variety of flora .This can be done with the expert
guidance of consultants, hoteliers, industrialists and businessmen.

18. Single window facility should be provided for booking rooms in city hotels and
other tourism related services. Indian Government should Improve & change the
image of Kashmir valley: Germany was the first country to change the caution
notice to its citizens against travelling to Kashmir. They also went on to state that

“foreigners were not a target for militants in Indian-held Kashmir”. The government
should urge other countries to change their travel advisories and market Kashmir
as an adventure destination for the tourists.

19. The Government of India has to put in an extra effort to provide adequate safety
to foreign tourists, especially the female visitors.

20. Similar entry fees at tourist spots: It is a common practice in India to charge
much higher entry fees at major tourist spots from foreign tourists in comparison
to Indians. Although it is major revenue generating source for the Government of

India still the price discrimination, if not abolished, should be minimized.

21. Development of North-east states: Efforts should be made for the promotion of
heritage of north-eastern states of India, which have a great potential to attract
foreign tourists because of their rich natural beauty.

22. VoA scheme: In an attempt to push inbound arrivals in India the Government should
extend VoA (Visa on Arrival) scheme to more and more nations. India currently
issues VoA to 14 countries viz: Japan, Indonesia, The Philippines, Cambodia, Laos,

Vietnam., Singapore, Myanmar, Finland, New Zealand, Luxembourg, France,

Germany and Russia.

4.5 CONCLUSION

Travel & Tourism Industry has emerged as an important instrument in the economic
development of Indian economy, particularly in remote backward rural areas. Due to
its strong backward and forward linkages it generates employment in different profiles
and thus increases living standard of people who are directly or indirectly linked with this
economically profitable activity. The Indian tourism has a clear bright future because
the demand for travel and tourism in India is expected to grow by 8.2 per cent between

SECTION 4 – ROLE OF COMPANY SECRETARY

63

2010 and 2019 and will place India at the 3rd position in the world. Besides huge foreign
exchange earnings and escalation of world class infrastructure development India’s travel
and tourism sector is expected to be the 2nd largest employer in the world, employing

40,037,000 by 2019. Keeping in view its socio-economic impacts on Indian tourism the
need of hour is that supply of those products and services that attract foreigners must
regularly be upgraded to meet the changing needs of the market, which is necessary for
continuous in flow and optimum satisfaction of tourists.

The Researcher wants to conclude that tourism can be used as a catalyst for socio-
economic development if Government and other people involved in the industry pursue
sustainable development its in a comprehensive and planned manner and formulate
appropriate market demanding policies.

The Researcher believes that after its completion this study will definitely show the “Ministry
of Tourism a way to achieve its vision, “Promoting tourism in India and making the country
a major tourist destination with a view to providing a better quality of life to its people”.

The document also be helpful to the people and professionals as far as employability is
concerned. The study reveals specific observation on : Strategic Information Requires by
the Industry and Target Marketing pertaining to Travel & Tourism.

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TOURISM INDUSTRY

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R.P. Das, Nageshwar Rao (2002),Journal of services Research,volume 2,number 1(April-

September ,2002)

Anton Abdulbasah Kamil (2010), ozean Journal of social Sciences 3(2),2010 ISSN 1943-

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Perunjodi Naidoo, Prabha Ramseook Munhurrun, Jeynakshi Ladsawut (2008),global journal
of business ,vol 4, no. 2,2010

Theresia A. Pawitra and Kay C. Tan (2001),Managing service quality vol-13,no.5 2003,pp

399-411

Neeraj Kaushik, Jyoti Kaushik,Priyanka Sharma & Savita Rani (2009),The IUP journal of brand

Mgt,Vol. VI , Nos. 1 & 2,2010

David Foster, Centre for Management Quality Research, RMIT University

Takeshi Kurihara, Naohisa Okamoto(2010),Journal of The Eastern Asia Society for

Transportation studies, vol .8,2010

Barbara, J. (2006) Tisch to Hoteliers: Get Involved in Fed Policy. Commercial Real Estate

News and Property Resource. Retrieved June 6, 2006 from GlobeSt.com.

Brothers, G. (2006a). International Visitor Information Col ection and distribution: A Tourism

Industry Perspective.

Brothers, G. (2006b). Personal Interview. April 7, 2006.

Buchanan, J.M. and G. Tul ock (1962). The Calculus of Consent. Univeristy of Michigan,

Ann Arbor, MI.

Bush, G.W. (2006). Letter on American Competitiveness Initiative. February 2, 2006.

Carlile, W.H. (1994). States Are Closing Firms’ ‘Candy Store’: Laws Tighten Incentives

Oh, C. (2005). The Contribution of Tourism Development to Economic Growth in the Korean

Economy. Tourism Management, 26(1), 39-44.

Planning Commission Report, India. 2007.

Tourism Satellite Account, World Tourism and Travel council, India. 2010.

UNWTO Tourism Highlights. (2009). Retrieved from http://mkt.unwto.org/en/content/ tourism-
highlights

World Tourism Organization (2015), “News from the World Tourism Organization”, Retrieved
from http://www.world-tourism

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65

ANNEXURE-1:

Sustainable Tourism

Global Codes of Ethics for Tourism

[Article 1] Tourism’s contribution to mutual understanding and respect between
peoples and societies

1. The understanding and promotion of the ethical values common to humanity,
with an attitude of tolerance and respect for the diversity of religious, philosophical
and moral beliefs, are both the foundation and the consequence of responsible
tourism; stakeholders in tourism development and tourists themselves should
observe the social and cultural traditions and practices of all peoples, including
those of minorities and indigenous peoples and to recognize their worth;

2. Tourism activities should be conducted in harmony with the attributes and
traditions of the host regions and countries and in respect for their laws, practices
and customs;

3. The host communities, on the one hand, and local professionals, on the other,
should acquaint themselves with and respect the tourists who visit them and find
out about their lifestyles, tastes and expectations; the education and training
imparted to professionals contribute to a hospitable welcome;

4. It is the task of the public authorities to provide protection for tourists and visitors and their
belongings; they must pay particular attention to the safety of foreign tourists owing to the
particular vulnerability they may have; they should facilitate the introduction of specific
means of information, prevention, security, insurance and assistance consistent with
their needs; any attacks, assaults, kidnappings or threats against tourists or workers in the
tourism industry, as well as the wilful destruction of tourism facilities or of elements of cultural
or natural heritage should be severely condemned and punished in accordance with
their respective national laws;

5. When travelling, tourists and visitors should not commit any criminal act or any
act considered criminal by the laws of the country visited and abstain from
any conduct felt to be offensive or injurious by the local populations, or likely
to damage the local environment; they should refrain from all trafficking in illicit
drugs, arms, antiques, protected species and products and substances that are
dangerous or prohibited by national regulations;

6. Tourists and visitors have the responsibility to acquaint themselves, even before
their departure, with the characteristics of the countries they are preparing to visit;
they must be aware of the health and security risks inherent in any travel outside
their usual environment and behave in such a way as to minimize those risks;

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TOURISM INDUSTRY

[Article 2] Tourism as a vehicle for individual and collective fulfilment

1. Tourism, the activity most frequently associated with rest and relaxation, sport and
access to culture and nature, should be planned and practised as a privileged
means of individual and collective fulfilment; when practised with a sufficiently
open mind, it is an irreplaceable factor of self-education, mutual tolerance and
for learning about the legitimate differences between peoples and cultures and
their diversity;

2. Tourism activities should respect the equality of men and women; they should
promote human rights and, more particularly, the individual rights of the most
vulnerable groups, notably children, the elderly, the handicapped, ethnic
minorities and indigenous peoples;

3. The exploitation of human beings in any form, particularly sexual, especially when
applied to children, conflicts with the fundamental aims of tourism and is the
negation of tourism; as such, in accordance with international law, it should be
energetically combatted with the cooperation of all the States concerned and
penalized without concession by the national legislation of both the countries
visited and the countries of the perpetrators of these acts, even when they are
carried out abroad;

4. Travel for purposes of religion, health, education and cultural or linguistic exchanges
are particularly beneficial forms of tourism, which deserve encouragement;

5. The introduction into curricula of education about the value of tourist exchanges,
their economic, social and cultural benefits, and also their risks, should be
encouraged;

[Article 3] Tourism, a factor of sustainable development

1. All the stakeholders in tourism development should safeguard the natural
environment with a view to achieving sound, continuous and sustainable
economic growth geared to satisfying equitably the needs and aspirations of
present and future generations;

2. All forms of tourism development that are conducive to saving rare and precious
resources, in particular water and energy, as well as avoiding so far as possible
waste production, should be given priority and encouraged by national, regional
and local public authorities;

3. The staggering in time and space of tourist and visitor flows, particularly those
resulting from paid leave and school holidays, and a more even distribution of
holidays should be sought so as to reduce the pressure of tourism activity on the

ANNEXURE

67
environment and enhance its beneficial impact on the tourism industry and the
local economy;

4. Tourism infrastructure should be designed and tourism activities programmed in
such a way as to protect the natural heritage composed of ecosystems and
biodiversity and to preserve endangered species of wildlife; the stakeholders
in tourism development, and especial y professionals, should agree to the
imposition of limitations or constraints on their activities when these are exercised
in particularly sensitive areas: desert, polar or high mountain regions, coastal
areas, tropical forests or wetlands, propitious to the creation of nature reserves or
protected areas;

5. Nature tourism and ecotourism are recognized as being particularly conducive
to enriching and enhancing the standing of tourism, provided they respect the
natural heritage and local populations and are in keeping with the carrying
capacity of the sites;

[Article 4] Tourism, a user of the cultural heritage of mankind and contributor to its
enhancement

1. Tourism resources belong to the common heritage of mankind; the communities
in whose territories they are situated have particular rights and obligations to
them;

2. Tourism policies and activities should be conducted with respect for the artistic,
archaeological and cultural heritage, which they should protect and pass on
to future generations; particular care should be devoted to preserving and
upgrading monuments, shrines and museums as well as archaeological and
historic sites which must be widely open to tourist visits; encouragement should
be given to public access to privately-owned cultural property and monuments,
with respect for the rights of their owners, as well as to religious buildings, without
prejudice to normal needs of worship;

3. Financial resources derived from visits to cultural sites and monuments should, at
least in part, be used for the upkeep, safeguard, development and embellishment
of this heritage;

4. Tourism activity should be planned in such a way as to allow traditional cultural
products, crafts and folklore to survive and flourish, rather than causing them to
degenerate and become standardized;

[Article 5] Tourism, a beneficial activity for host countries and communities

1. Local populations should be associated with tourism activities and share equitably

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TOURISM INDUSTRY
in the economic, social and cultural benefits they generate, and particularly in
the creation of direct and indirect jobs resulting from them;

2. Tourism policies should be applied in such a way as to help to raise the standard
of living of the populations of the regions visited and meet their needs; the
planning and architectural approach to and operation of tourism resorts and
accommodation should aim to integrate them, to the extent possible, in the
local economic and social fabric; where skills are equal, priority should be given
to local manpower;

3. Special attention should be paid to the specific problems of coastal areas and
island territories and to vulnerable rural or mountain regions, for which tourism
often represents a rare opportunity for development in the face of the decline of
traditional economic activities;

4. Tourism professionals, particularly investors, governed by the regulations laid
down by the public authorities, should carry out studies of the impact of their
development projects on the environment and natural surroundings; they should
also deliver, with the greatest transparency and objectivity, information on their
future programmes and their foreseeable repercussions and foster dialogue on
their contents with the populations concerned;

[Article 6] Obligations of stakeholders in tourism development

1. Tourism professionals have an obligation to provide tourists with objective and
honest information on their places of destination and on the conditions of travel,
hospitality and stays; they should ensure that the contractual clauses proposed to
their customers are readily understandable as to the nature, price and quality of
the services they commit themselves to providing and the financial compensation
payable by them in the event of a unilateral breach of contract on their part;

2. Tourism professionals, insofar as it depends on them, should show concern, in
co-operation with the public authorities, for the security and safety, accident
prevention, health protection and food safety of those who seek their services;
likewise, they should ensure the existence of suitable systems of insurance and
assistance; they should accept the reporting obligations prescribed by national
regulations and pay fair compensation in the event of failure to observe their
contractual obligations

3. Tourism professionals, so far as this depends on them, should contribute to the
cultural and spiritual fulfilment of tourists and allow them, during their travels, to
practise their religions;

ANNEXURE

69

4. The public authorities of the generating States and the host countries, in
cooperation with the professionals concerned and their associations, should
ensure that the necessary mechanisms are in place for the repatriation of tourists
in the event of the bankruptcy of the enterprise that organized their travel;

5. Governments have the right – and the duty - especial y in a crisis, to inform
their nationals of the difficult circumstances, or even the dangers they may
encounter during their travels abroad; it is their responsibility however to
issue such information without prejudicing in an unjustified or exaggerated
manner the tourism industry of the host countries and the interests of their
own operators; the contents of travel advisories should therefore be discussed
beforehand with the authorities of the host countries and the professionals
concerned; recommendations formulated should be strictly proportionate to
the gravity of the situations encountered and confined to the geographical
areas where the insecurity has arisen; such advisories should be qualified or
cancel ed as soon as a return to normality permits;

6. The press, and particularly the specialized travel press and the other media,
including modern means of electronic communication, should issue honest
and balanced information on events and situations that could influence the
flow of tourists; they should also provide accurate and reliable information to
the consumers of tourism services; the new communication and electronic
commerce technologies should also be developed and used for this purpose;
as is the case for the media, they should not in any way promote sex tourism;

[Article 7] Right to tourism

1. The prospect of direct and personal access to the discovery and enjoyment of
the planet’s resources constitutes a right equally open to all the world’s inhabitants;
the increasingly extensive participation in national and international tourism should
be regarded as one of the best possible expressions of the sustained growth of
free time, and obstacles should not be placed in its way;

2. The universal right to tourism must be regarded as the corollary of the right to rest
and leisure, including reasonable limitation of working hours and periodic holidays
with pay, guaranteed by Article 24 of the Universal Declaration of Human Rights
and Article 7.d of the International Covenant on Economic, Social and Cultural

Rights;

3. Social tourism, and in particular associative tourism, which facilitates widespread
access to leisure, travel and holidays, should be developed with the support of
the public authorities;

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TOURISM INDUSTRY

4. Family, youth, student and senior tourism and tourism for people with disabilities,
should be encouraged and facilitated;

[Article 8] Liberty of tourist movements

1. Tourists and visitors should benefit, in compliance with international law and national
legislation, from the liberty to move within their countries and from one State to
another, in accordance with Article 13 of the Universal Declaration of Human

Rights; they should have access to places of transit and stay and to tourism and
cultural sites without being subject to excessive formalities or discrimination;

2. Tourists and visitors should have access to al available forms of communication,
internal or external; they should benefit from prompt and easy access to local
administrative, legal and health services; they should be free to contact the
consular representatives of their countries of origin in compliance with the
diplomatic conventions in force;

3. Tourists and visitors should benefit from the same rights as the citizens of the
country visited concerning the confidentiality of the personal data and information
concerning them, especially when these are stored electronically;

4. Administrative procedures relating to border crossings whether they fall within
the competence of States or result from international agreements, such as
visas or health and customs formalities, should be adapted, so far as possible,
so as to facilitate to the maximum freedom of travel and widespread access
to international tourism; agreements between groups of countries to harmonize
and simplify these procedures should be encouraged; specific taxes and levies
penalizing the tourism industry and undermining its competitiveness should be
gradually phased out or corrected;

5. So far as the economic situation of the countries from which they come permits,
travel ers should have access to allowances of convertible currencies needed for
their travels;

[Article 9] Rights of the workers and entrepreneurs in the tourism industry

1. The fundamental rights of salaried and self-employed workers in the tourism
industry and related activities, should be guaranteed under the supervision of the
national and local administrations, both of their States of origin and of the host
countries with particular care, given the specific constraints linked in particular
to the seasonality of their activity, the global dimension of their industry and the
flexibility often required of them by the nature of their work;

2. Salaried and self-employed workers in the tourism industry and related activities

ANNEXURE

71
have the right and the duty to acquire appropriate initial and continuous training;
they should be given adequate social protection; job insecurity should be limited
so far as possible; and a specific status, with particular regard to their social
welfare, should be offered to seasonal workers in the sector;

3. Any natural or legal person, provided he, she or it has the necessary abilities and
skills, should be entitled to develop a professional activity in the field of tourism
under existing national laws; entrepreneurs and investors - especially in the area
of small and medium-sized enterprises - should be entitled to free access to the
tourism sector with a minimum of legal or administrative restrictions;

4. Exchanges of experience offered to executives and workers, whether salaried or
not, from different countries, contributes to foster the development of the world
tourism industry; these movements should be facilitated so far as possible in
compliance with the applicable national laws and international conventions;

5. As an irreplaceable factor of solidarity in the development and dynamic growth
of international exchanges, multinational enterprises of the tourism industry should
not exploit the dominant positions they sometimes occupy; they should avoid
becoming the vehicles of cultural and social models artificially imposed on
the host communities; in exchange for their freedom to invest and trade which
should be fully recognized, they should involve themselves in local development,
avoiding, by the excessive repatriation of their profits or their induced imports, a
reduction of their contribution to the economies in which they are established;

6. Partnership and the establishment of balanced relations between enterprises of
generating and receiving countries contribute to the sustainable development of
tourism and an equitable distribution of the benefits of its growth;

[Article 10] Implementation of the principles of the Global Code of Ethics for Tourism

1. The public and private stakeholders in tourism development should cooperate in
the implementation of these principles and monitor their effective application;

2. The stakeholders in tourism development should recognize the role of international
institutions, among which the World Tourism Organization ranks first, and non-
governmental organizations with competence in the field of tourism promotion
and development, the protection of human rights, the environment or health, with
due respect for the general principles of international law;

3. The same stakeholders should demonstrate their intention to refer any disputes
concerning the application or interpretation of the Global Code of Ethics for

Tourism for conciliation to an impartial third body known as the World Committee
on Tourism Ethics.

Source: World Tourism Organization, 1999

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TOURISM INDUSTRY

ANNEXURE-2

Organizations associated with Tourism Industry:

1. World Travel and Tourism Council: The World Travel and Tourism Council (WTTC) is
unique in its structure as it is the only organization representing the private sector in the
global context of the travel and tourism industry. It is comprised of business leaders
from around the world who are presidents, chairs and CEOs of 100 of the world’s
foremost travel and tourism companies representing almost al sectors of the industry.

2. United Nations World Tourism Organization: The UNWTO, as part of the United

Nations, is the leading international organization in the field of travel and tourism
and is headquartered in Madrid, Spain.

3. Organisation for Economic Cooperation and Development: The Organisation
for Economic Cooperation and Development (OECD), located in Paris, France, is
bipartite in its structure. It serves as a forum in which governments work together
to focus effectively on the challenges of interdependence and globalization
through economic, social and environmental segments. In its efforts to ‘underpin
multilateral cooperation’, OECD produces global research data, analyses and
forecasts to enable economic growth and stability, strengthen trading systems,
expand financial services and cross-border investments and promote best
practices on the international forefront.

4. Asia-Pacific Economic Cooperation (Tourism Charter): APEC Tourism Charter
constitutes the basis for APEC tourism cooperation. The Charter reflects a collective
commitment to improve the economic, cultural, social and environmental well-
being of APEC member economies through tourism. It establishes four key
policy goals and an agreed process for realizing sustainable development and
enhancement of quality and quantity of tourism.

5. Caribbean Tourism Organization: In 1989, the Caribbean Tourism Organization

(CTO) emerged from its predecessors, the Caribbean Tourism Association founded
in 1951 and the Caribbean Tourism Research and Development Centre founded
in 1974. The CTO, headquartered in Barbados, is an international development
agency and the official body for promoting and developing tourism throughout
the Caribbean. This organization provides information and assistance to its
member countries and non-governmental members in order to achieve
sustainable development.

6. Southeast Tourism Society: The Southeast Tourism Society (STS), headquartered in

Atlanta, Georgia, is just one example of a regional y based tourism organization
found in the United States as well as in other countries. STS is a non-profit
membership organization, which started in 1983 and represents the interests of
tourism industry members in twelve states: Alabama, Arkansas, Florida, Georgia,

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73

Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia
and West Virginia.

7. East Asia Inter-Regional Tourism Forum: East Asia Inter-Regional Tourism Forum
was founded in Gangwon Province, Korea in 2000 in order to pursue for peace
and prosperity through exchanges in diverse fields, and ten member provinces
are currently participating. Additionally, it is the only one international tourism
association in East Asia, led by local governments.

8. Global Tourism Economy Research Centre: Global Tourism Economy Research

Centre, inaugurated in October 2011, is an independent, non-profit international
research organization with a special purview on tourism & travel development
in Asia as it relates and contributes to positive and sustainable global economic
growth. Attuned to what is happening in the region through research and exchange
platforms, the Center will openly share with government bodies and travel and
tourism-related stakeholders how Asia’s development will positively impact the
globe. The Centre’s unique and prescient insight on the tourism economy and its
progressive and unique approach to aggregating and analyzing research from
global authoritative bodies seeks to deliver solutions and advance ideas that will
lead to the sustainable development of travel and tourism, in the region and
around the world.

9. Monitoring Centre for UNWTO Sustainable Tourism Observatories: Monitoring

Centre is a specialized organization in sustainable tourism monitoring under
the auspices of UNWTO. And it is under the overall responsibility of Sun Yat-Sen

University in administrative and legal terms. The Centre was established in 2010 to
facilitate the establishing, managing and monitoring process of the existing and
future sustainable tourism observatories in China and possibly in the Asia-Pacific
region.

10. World Tourism Cities Federation: World Tourism Cities Federation (WTCF) is a non-
governmental, non-profit international tourism organization voluntarily formed by
wel -known tourism cities and tourism-related institutions around the world under
the initiative of Beijing. Established on 15 September 2012 in Beijing, WTCF has its
headquarters and secretariat based in Beijing, and takes Chinese and English
as its official languages. WTCF aims to increase the appeal of tourism cities as
international destinations, enhance the quality and efficiency of their services,
boost the brand image of tourism cities and promote balanced economic and
social progress in tourism cities and regions.

11. International Hotel & Restaurant Associations: The IH&RA is the only international
trade association exclusively devoted to promoting and defending the interests
of the hotel and restaurant industry worldwide. It is a non-profit organization and
is officially recognized by the United Nations. IH&RA monitors and lobbies all
international agencies on behalf of the hospitality industry.

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TOURISM INDUSTRY

Document Outline

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- Tourism Industry

Table of Contents

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- Tourism Industry