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Advisory Support for the Development of the Buddhist Circuit in South Asia

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Advisory Support for the Development of the Buddhist Circuit in South Asia Public Disclosure Authorized Public Disclosure Authorized ADVISORY SUPPORT FOR THE DEVELOPMENT OF THE BUDDHIST CIRCUIT IN SOUTH ASIA Enhancing Opportunities for Private Sector Investment Public Disclosure Authorized in the Buddhist Circuit in South Asia TECHNICAL NOTE ON INVESTMENT ENTRY RESTRICTIONS IN TOURISM RELATED SERVICES IN INDIA November 2017 Public Disclosure Authorized Acknowledgements South Asian Buddhist heritage is indisputably one of the most important in the world. Several places in the region are directly linked to the historical Buddha’s life and the spread of his philosophy around the world. Despite the spiritual value of these places and their historical linkages, they have not been successfully developed, managed or promoted as an integrated whole in the way that other, similarly significant places around the world have.1 As a result, only a small fraction (0.005%) of the world’s 500 million Buddhists visit the key Buddhist sites of South Asia each year. Recognizing this, South Asian countries are committed to developing their Buddhist heritage as a holistic and inclusive pilgrimage route and tourism product. To this end, countries across the region have requested the World Bank’s advisory and technical support based on its long experience in unlocking tourism for lasting poverty reduction and inclusive growth goals. In response, the World Bank, with the financial support of the Government of Australia, has formulated and is implementing a Technical Assistance for the Development of the Buddhist Circuit, which this study is part of. This report was prepared under the overall guidance of Stefania Abakerli (Sr. Urban Development Planner and Coordinator of the Program for the Development of the Buddhist Circuit at the World Bank) by the Investment Policy and Promotion Team of The World Bank. The team was led by Priyanka Kher and comprised of Barbara Kotschwar, Matthew Stephenson and Maximilian Philip Eltgen. Research and the legal and institutional assessments in India were carried out by Kuriakose Varghese and Sanjay Saxena. The team would like to thank Christine Qiang, Roberto Echandi and Heba Shams for their advisory support to the team as well as Vincent Palmade, Robert Whyte, Dongwook Chun, Zhi Gan and Kunxiang Diao for their insights. The team is also grateful to the invaluable ideas, suggestions and experiences shared by those policy makers, private investors, tour operators, and tourism agencies consulted with during the research and report write up. 2 Table of Contents Executive Summary ....................................................................................................................................... 4 1. Introduction .......................................................................................................................................... 9 2. Summary of Findings of the Legal and Regulatory Analysis ................................................................ 16 A. NATIONAL LEGAL FRAMEWORK ...................................................................................................... 16 B. TOUR GUIDE SERVICES .................................................................................................................... 20 C. TOUR OPERATING SERVICES ........................................................................................................... 21 D. ACCOMMODATION ......................................................................................................................... 22 E. MEAL SERVING SERVICES ................................................................................................................ 24 F. TRANSPORTATION .......................................................................................................................... 25 G. INSTITUTIONAL FRAMEWORK ......................................................................................................... 29 H. VISA REGIME ................................................................................................................................... 33 3. Experiences from Other Countries - Examples of Good Practices ...................................................... 35 A. INSTITUTIONAL FRAMEWORK ......................................................................................................... 35 1. Strategic plan for direction of institutional activities .................................................................. 36 2. Clear delineation of roles and responsibilities, with authority emanating from specific legal source .................................................................................................................................................... 39 3. Empowerment of an institutional lead for national tourism development ................................ 39 4. Coordination mechanisms .......................................................................................................... 39 5. Consultation processes ............................................................................................................... 42 6. Separation of regulatory and investment functions ................................................................... 45 7. Certification systems and licensing regimes ............................................................................... 46 8. Tourism development zones ....................................................................................................... 47 9. Funding mechanisms .................................................................................................................. 47 B. LICENSING REGIME ......................................................................................................................... 48 C. LAND ALLOCATION .......................................................................................................................... 53 D. MONASTIC INTERESTS..................................................................................................................... 55 4. References .......................................................................................................................................... 62 Annex 1 – Key Policies and Laws Reviewed (not exhaustive) .................................................................. 68 Annex 2 - Hospitality Licensing in India ................................................................................................... 72 Annex 3 - Issue Areas and Recommendations ........................................................................................ 73 3 Executive Summary As India continues its path towards development, the tourism sector can significantly enable it to progress on various indicators. The sector directly contributed about $72 billion dollars to the Indian economy in 2016, amounting to 3.3 percent of GDP, and directly employed 25 million people (5.8 percent of total employment). Its contribution to GDP is projected to rise by nearly 7 percent in 2017, according to the World Travel & Tourism Council.1 India’s steady growth in international tourists speaks to its vast cultural and natural resources and its price competitiveness. However, India has not yet fully exploited its vast tourism potential. India receives only slightly over 1 percent of international tourists – lower than the Netherlands, Poland and Canada, and much below France, with a domestic population nearly 20 times smaller than India’s, but that boasts 7 percent of world tourists. This is even though it has 28 UNESCO World Heritage cultural sites and 8 natural sites, in addition to several sites of religious importance – in particular for Buddhism. India has the ninth largest population of Buddhists in the world, with over 9.2 million resident Buddhists in 2010. The population of the top 10 Buddhist countries, excluding India, amounts to an estimated 451 million. If India can attract about 13% of this population, India’s tourism arrivals would become on par with Spain - the largest recipient of international travelers. India currently ranks 40th out of 136 countries in the World Economic Forum’s Travel & Tourism Competitiveness (TTC) Index 2017. India’s main source of competitiveness is price, followed by its rich natural and cultural resources. India’s lowest score, and major challenge, is in tourism service infrastructure - that is, key tourism services, such as quality accommodations, transport (e.g. car rentals), and access to services such as automatic teller machines. Private sector investment can enable India to improve its tourism service infrastructure. This Report considers the policy, legal and regulatory barriers to greater private investment in select sectors2, along the Buddhist Circuit. In addition to central level legal instruments, laws and regulations from Madhya Pradesh and Uttar Pradesh were also reviewed. The full list of laws reviewed for this report is provided in Annex 1. The report first examines national level laws and regulations applicable to businesses in most sectors of the economy and then goes on to examine sector specific laws and regulations. Under the Constitution, legislative power is divided between the Union Legislature and State legislatures- Parliament has the exclusive power to legislate on topics enumerated in List I of the Seventh Schedule, State governments on topics in List II, and both Parliament and the State Governments can legislate on the topics in List III (with enactments by the Parliament having primacy).
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