Travel and Survive, revive and thrive in times of COVID-19

June 2020 Contents

FICCI Foreword 3

Grant Thornton in India Foreword 4

Global and tourism industry: An overview 5

Indian travel and tourism industry 8

Indian Government’s key policies to boost the sector (pre-COVID-19) 14

Impact of COVID-19 pandemic on the travel and tourism industry 16

Relief measures and recommendations by FICCI to the Government of India 20

Government relief packages in other countries 30

02 Industry 4.0: Transforming the manufacturing landscape FICCI Foreword

The travel and tourism industry in India is looking at up to 40 million job losses (both direct and indirect) and about USD 17 billion in revenue loss in the next one year.

The COVID-19 pandemic has resulted in the loss of lives and The government has also leveraged e-visa capabilities and livelihood all across the globe. Industries across the spectrum extended it to 169 countries making it easier for individuals to have been impacted by the pandemic, the travel and tourism visit our country. industry has felt maximum impact due to grounding of planes, closure of railways, and other establishments. Looking ahead, will be the way forward as inbound tourism will take longer to revive and open up. The travel and tourism industry has proven its importance as Although the Indian travel and tourism industry has not an economic growth engine for the world economy. For nine received much support from the recent announcements on years consecutively, the industry’s growth rate has surpassed the economic relief package by the government, it should the growth rate of the global economy. In 2019, the industry be considered as a priority sector. In order to achieve this, grew at 3.5% compared to global GDP growth rate of 2.5%. government, industry and institutions must make collaborative Accounting for 10.3% of total GDP, the industry contributed efforts to create a supportive ecosystem for tourism. USD 8.9 trillion to the global GDP and created approximately 330 million jobs, one in 10 that year. We are happy that a National Tourism Taskforce (NTF) has been formed by the Ministry of Tourism, Government of India. The tourism sector makes a significant impact on the economy It will play a major role in the survival and revival of the Indian of our country. The data by World Travel and Tourism Council travel and tourism industry so that it can once again be the (WTTC) reveals that in 2019 the tourism industry in India torch bearer for the Indian economy. contributed INR 194 billion to India’s GDP. The industry also supported 87.5 million jobs, 12.75% of total employment in We are pleased to present the FICCI - Grant Thornton report, 2018-19. Due to the impact of the pandemic on the global Travel and Tourism: Survive, revive and thrive in times of economy, the WTTC is estimating losses of up to USD 2.7 COVID-19, which looks at the impact of this crisis and the trillion with up to 100 million jobs at risk. The travel and tourism recommendations for survival and revival. This document will industry in India is looking at up to 40 million job losses (both facilitate a better understanding of the challenges faced by direct and indirect) and about USD 17 billion in revenue loss in the industry and the opportunities for revival, both by the the next one year. government and private sector.

All across the world, countries are looking at tourism as the Dr. Jyotsna Suri main driver to revive their economy. The central government Past President, FICCI plays an important role in developing a strong visitor economy Chairperson, FICCI Tourism Committee which is evident from the fact that the Ministry of Tourism has Chairperson and Managing Director, also undertaken a slew of initiatives, such as the Incredible The Lalit Suri Hospitality Group India 2.0 campaign focusing on niche tourism products Mr. Dilip Chenoy including wellness and adventure tourism, as well as investment Secretary General, FICCI into the industry through schemes, such as PRASHAD and Swadesh Darshan, which have proven to be successful in increasing the number of foreign and domestic visitors in India.

Travel and Tourism - Survive, revive and thrive in times of COVID-19 0 3 Grant Thornton in India Foreword

To minimise the impact of COVID-19 on the industry as well as the livelihoods of millions dependent on it, the government should introduce short-term relief measures and encourage collaboration and participation from all stakeholders across the industry.

For many years, the travel and tourism sector has maintained sectors. While the Government of India’s (GoI) mandatory its position as an important growth engine and job creator for lockdown is being rightly lauded as the one of the best the world economy. According to World Travel and Tourism containment measures globally, the industry’s losses due to Council (WTTC), the sector grew at a rate of 3.5% contributing it will be humongous, not only until the country reaches its USD 8.9 trillion to world GDP and one in every 10 jobs was apex of infections but during the recovery phase too. Some created by the sector totalling up to approximately 330 companies in this space have already announced layoffs million jobs worldwide. India’s travel and tourism sector had besides putting their hiring plans on hold. been growing consistently, generating 87.5 million jobs and adding USD 194 billion to the country’s GDP in 2019. Diverse Winston Churchill once said, “Never let a good crisis go to landscape coupled with multiple tourism offerings, ranging waste.” The aim to is to help the industry survive these tough from wellness to adventure, and a spike in the adoption of times, and come through it successfully. For that, everyone, niche experiences augmented domestic as well as foreign including the government, banks, companies and employees, inbound tourism. In 2019, India recorded 10.8 million foreign will need to work collaboratively to ensure that the consumer tourist arrivals, a growth of 3.2% from 2018, earning USD 29.9 sentiment becomes positive once the lockdown restrictions are billion in foreign exchange earnings. removed.

While industries and sectors across the spectrum have been Rohit Arora severely impacted by the novel coronavirus, the travel and Chartered Accountant, tourism sector has been worst hit. Experts at the WTTC estimate Gurugram travel and tourism GDP to be eroded by approximately USD 2.7 trillion in 2020 with up to 100.8 million jobs around the world at risk.

To tide over the pandemic and minimise its impact on the livelihoods of millions, besides announcing short-term relief measures, governments across the world must work in close collaboration with industry experts from both private and third

04 Travel and Tourism - Survive, revive and thrive in times of COVID-19 Global travel and tourism industry: An overview

Travel and Tourism - Survive, revive and thrive in times of COVID-19 0 5 The global travel and tourism industry is a key contributor to the global economy, accounting for USD 8.9 trillion, translating into 10.3% of global GDP

Growth rate and employment Reinforcing role in global opportunities economic growth

The significance of the travel and tourism industry can be With its continued resilience against socio-economic witnessed by the trend in its growth rate of 3.5% outpacing disturbances and other events, the travel and tourism the growth rate of global GDP of 2.5% as of 2019. For nine industry contributed USD 8.9 trillion in total to the global GDP, consecutive years, as a result of higher disposable incomes, accounting for nearly 10.3% of the total figure in 2019. technological advances, affordable travel and better work- life balance, amongst others, the travel and tourism industry Globally, the sector’s direct contribution to GDP through has sustained its growth, emerging as one of the leading spends on business and leisure activities as well as government contributors to the global economy. spending, stood at approximately USD 2.9 trillion in 2019. Although Europe was home to half the countries on the list of Importance of travel and tourism in global growth the top 10 contributors, the United States of America’s travel and tourism industry’s direct contribution was the highest, 7.0% 6.5% amounting to approximately USD 581 billion, followed by China 6.0% 5.0% at USD 403 billion. India ranked 8th with a total direct travel 5.0% 4.4% 4.2% 4.0% 4.1% 3.5% and tourism contribution of approximately USD 108 billion. 4.0% 3.3% 3.2% 3.0% Countries around the world rely heavily on the travel and 3.1% 3.1% 2.8% 2.8% 3.0% 2.0% 2.5% 2.7% 2.5% 2.5% tourism industry to propel growth. Coined as the ‘Las Vegas 1.0% of Asia’, Macau topped the list with the highest share of GDP 0.0% through direct tourism with over half its GDP coming from the 2011 2012 2013 2014201520162017 2018 2019 travel and tourism industry at 50.2%. Maldives was second Annual growth % T&T contribution to GDP in line with 32.5% of GDP share generated by the sector. Annual growth % World GDP Other popular destinations, such as Seychelles, the Bahamas and Belize, were also amongst the top few with direct Serving as a catalyst for further global growth, the travel and contributions to GDP standing at 26.4%, 19.5% and 15.5%, tourism industry not only impacts millions of individuals but respectively. also has the power to transform communities. Accounting for more than one-third of the global services trade, its growth rate facilitates the creation of more and better jobs requiring a diverse portfolio of skills and capabilities.

In 2019, the travel and tourism industry created approximately 330 million jobs, accounting for nearly one-tenth of the total jobs created worldwide.

06 Travel and Tourism - Survive, revive and thrive in times of COVID-19 Of the total contribution of USD 8.9 trillion, two-thirds of the travel and tourism sector’s GDP contribution is via indirect or induced factors such as capital investment into the sector by other sectors, government spending to aid growth of the sector (at a national, regional or local scale) as well as spending by individuals who are directly or indirectly employed in the sector.

Contribution of direct expenses to the travel and tourism industry

10,000 8,810.96 9,000 7,674.79 7,650.17 8,000 7,094.29 8,900.00 6,108.56 7,000 6,259.57 7,444.04 8,240.74 7,432.19 6,000 1,629.02 6,925.29 5,000 1,809.37 5,803.03 4,000 2,750.65 3,000 2,207.37 2,388.31 2,381.10 1,629.02 1,928.47 1,911.51 2,000 2,892.94 2,304.81 2,320.93 2,567.88 1,000 1,809.37 1,794.88 2,157.06 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 All figures are in USD billion Direct contribution Total contribution

A sector that attracts consistent investment

Historically, the travel and tourism industry has managed to attract all types of investors. The investments in this industry constituted nearly 4.3% of the total global investments in 2019. In absolute terms, the figure stood at USD 948 billion.

The United States of America invested USD 209 billion in its travel and tourism industry, followed by China at USD 170 billion in 2019. India secured a podium finish in the same year and ranked third, with a capital investment of USD 51.6 billion. Collectively, the top three countries accounted for approximately 45% of global investments into the travel and tourism industry.

Travel and Tourism - Survive, revive and thrive in times of COVID-19 0 7 India’s travel and tourism industry

08 Travel and Tourism - Survive, revive and thrive in times of COVID-19 India was ranked 34th in the Travel and Tourism Competitiveness Report 2019 published by World Economic Forum, up six positions from 40th in 2017.

The travel and tourism Increased domestic travel and industry provided 87.5 million spends jobs and accounted for 12.75% Domestic travellers drove the travel and tourism sector in India in 2019; domestic spend in the sector stood at 83%. This share of the total jobs created in the was expected to reach 89% by 2028, driven by an increase in country in 2019. disposable incomes and more leisure time at hand. Contribution to T&T GDP by domestic and foreign travellers India, with its geographically and culturally vast landscape, attracts travellers for a multitude of reasons - from business to 2019 2028 (expected) leisure. India is also home to 38 UNESCO World Heritage sites.

To boost both foreign and domestic travel, the government 11.15% 17% has introduced several schemes, such as Swadesh Darshan Scheme, Pilgrimage Rejuvenation and Spiritual Heritage Augmentation Drive (PRASHAD) and Adopt a Heritage. The main objective behind these schemes is to not only increase footfall, but enhance tourist experience and employment opportunities 83% 88.85% in a sustainable way.

The government’s efforts to focus on tourism is yielding results; India recorded over 10.8 million foreign tourist arrivals into Domestic spending Foreign visitor spending the country in 2019, a 3.2% y-o-y growth, and accounted for approximately USD 29.9 billion in foreign exchange earnings. The growth in spends on domestic tourism from USD 131 billion in 2012 to approximately USD 200 billion in 2018 was expected Growing at a rate higher than the global travel and tourism to double to approximately USD 406 billion by 2028, implying a industry (3.5%), at 4.9%, India’s travel and tourism industry CAGR of 7.3% between 2012 and 2028. contributed USD 194 billion to the Indian economy in 2019 which helped it gain 10th spot globally, in terms of contribution Growth in domestic expenditure of the to the global industry GDP. The Indian travel and Domestic expenditure on tourism (USD billions) tourism industry was expected to witness an annual growth 500 rate of 6.9% during 2019-2028 to reach USD 460 billion, 400 approximately 9.9% of India’s GDP in 2028. 406 300

With a population of more than 1.3 billion people and an 200 186 199 unemployment rate of 7.8%, this industry holds the potential to 164 179 100 131 140 150 provide livelihood to countless people, who in turn can help the 0 industry scale new heights. 2012 2013 2014 2015 2016 2017 2018 2028 (expected) Expenditure

Travel and Tourism - Survive, revive and thrive in times of COVID-19 0 9 India’s top domestic travel destinations

The contribution of domestic travel to Indian travel and tourism Although Gujarat captured only 2.9% of the domestic tourist sector has been unparalleled for the last two decades, growing market, the state witnessed a huge increase of 12.5% over almost nine-folds. In a bid to accelerate the growth momentum, 2017, owing to the inauguration of the Statue of Unity in 2018 the central government and various state governments have resulting in a revenue of USD 11.8 million. made consistent investments into various tourist hubs across the nation. Andhra Pradesh gained a steady increase in domestic travellers too, accounting for approximately 18% in 2017. This increase In 2018, Tamil Nadu secured the pole position with the largest can be attributed to , better air connectivity share of domestic travellers (386 million people) visiting the and tourist facilities provided by the state government. The state accounting for 20.8% of total domestic travel. This was state also has many heritage sites, which attract not only a y-o-y increase of 11.84% from 2017. Uttar Pradesh and international but domestic tourists too. Karnataka were next with approximately 285 million and 214 million visitors, respectively. Uttar Pradesh was the largest While other states have increased their yearly domestic visit gainer y-o-y, growing total domestic visitors by over 21% as figures in double digits, states, such as Telangana, West compared with 2017. Bengal, Madhya Pradesh and Rajasthan, showed single digit y-o-y growth of 9%, 7.5%, 7.6% and 9.4%, respectively.

Top 10 Indian states in domestic tourist footfall (in million)

Uttar Pradesh Rajasthan

285.08 15.4% 50.24 2.7% Madhya Pradesh Gujarat

10 2 83.97 4.5% 54.37 2.9% 9 8 7 Maharashtra West Bengal

5 119.19 6.4% 85.66 4.6% 6 Karnataka Andhra Pradesh Telangana 3 4 214.31 11.6% 194.77 10.5% 92.88 5.0% Tamil Nadu 1

385.91 20.8%

10 Travel and Tourism - Survive, revive and thrive in times of COVID-19 Investment in infrastructure Growth in demand • USD 863.60 million sanctioned to develop • Increasing share of millennial travellers 77 projects across 15 themed circuits pan trading in destination-based travel for India under the Swadesh Darshan scheme experience-based travel • USD 120.19 million sanctioned to develop • Government initiatives, including Incredible 51 sites across 28 states in the country India and Dekho Apna Desh, to boost under the Pilgrimage, Rejuvination And domestic travel Spiritual, Heritage Augmentation Drive • Growing popularity of niche tourism (PRASHAD) including medical and cruise tourism • USD 7 million sanctioned by the Ministry amongst others of Tourism to support central agencies to • Increased per capita earning slated to develop potential destinations under their reach USD 3277 by 2024 resulting in higher purview household incomes • Authority of India to invest USD 2.5 billion over 2019-2020 to upgrade airport infrastructure and increase regional connectivity

Growth of travel and tourism in India

Enabling government policies Favourable fiscal conditions • E-visa facilities have been extended to • 100% FDI in travel and tourism sectors visitors from 169 countries under five sub- under automatic route categories • Cumulative capital investment of USD 13 • Draft national tourism policy to aid billion until June 2019 collaboration between the Union and state • Several international players looking to minister of tourism to develop and promote penetrate the Indian market India to domestic and foreign travellers alike • International players with existing presence • Web-based public service delivery system looking to increase market presence through to allow applicants to check their travel and further investment in their India portfolio tourism project applications online in real- • Reduction of GST tax slabs for various time accommodation segments from 18% to 12% and 28% to 18%, respectively

Travel and Tourism - Survive, revive and thrive in times of COVID-19 1 1 Driving Indian tourism

The Indian travel and tourism industry is expected to be valued at USD 460 billion by 2028 (from USD 194 billion in 2019), accounting for 9.9% of India’s GDP and attracting multiple stakeholders, both domestic and international to invest in its growth.

Investment in infrastructure Favourable fiscal conditions

To promote India as a 365-day destination, the government Until June 2019, the travel and tourism industry had collectively initiated two schemes, Swadesh Darshan and PRASHAD, to raised USD 13 billion in capital investment. boost the tourism infrastructure in the country. India’s FDI policy allows for 100% investments through the Under Swadesh Darshan, 15 themed circuits were outlined to automatic route for all travel and tourism sectors whether it be developed into 77 projects. A cumulative sum of USD 863.6 be construction, road infrastructure or tourist activities. million was sanctioned, of which USD 526 million was released The year also saw numerous international players with a slim as of December 2019 for the development of these circuits. presence in India shore up their India portfolio. • Airbnb invested USD 75 million in OYO to leverage Indian Under the PRASHAD scheme, a total of 51 sites were identified users across 28 states. Since initiation, USD 120.2 million has been • Radisson Hotel Group announced plans to double its India sanctioned for the development of 28 projects in 17 states. Until portfolio from 94 to 200 by 2023 December 2019, USD 72.3 million has been released for the • Hilton Group announced its plans to add an additional 18 same. hotels in India by 2021 The Ministry of Tourism, India, has also been collaborating • Louvre Hotels Group acquired the Sarovar Hotels and with and supporting multiple central agencies, such as the network in 2017 in order to further penetrate the Archaeological Survey of India, the Port Trust of India and the Indian hotel industry. They plan to increase their business in India Tourism Development Corporation, to develop potential India to 10-15 hotels by 2021. destinations under their purview to increase tourism. India has entered into 47 Memorandum of Understanding To facilitate the showcasing of regional tourism, the Ministry of (MoUs) for bilateral tourism cooperation agreements with Tourism released a total of INR 74.7 million to multiple states countries, including Maldives, Finland, Korea, Qatar and and union territories for the purpose of fairs, festivals and/or Paraguay, to encourage free trade agreements (FTA) and tourism-related events. subsequently Foreign Exchange Earnings (FEE) from these countries through a mutual sharing of data and knowledge. With continued efforts on increasing tourism, the of India will be spending USD 2.5 billion to spruce After the introduction of Goods and Services Tax in 2017, up airport infrastructure and provide regional connectivity heavy taxes on accommodation curbed travellers’ enthusiasm. to under-served regions in India. Capital investments into the However, the GST council altered tax slabs for room tariffs. Indian travel and tourism sector are expected to reach USD GST on room tariffs of over INR 7,500 was reduced from 28% 95.3 billion by 2028. to 18%, while those between INR 1,000 and INR 7,500 was reduced from 18% to 12%. Room tariffs of below INR 1,000 do not attract GST.

12 Travel and Tourism - Survive, revive and thrive in times of COVID-19 Enabling government policies and Growth in demand measures With an ever increasing millennial population, higher Strict visa norms hindered India from reaching its true foreign disposable incomes (per capita earning expected to increase travel influx potential. A facilitative visa regime increased India’s to USD 3277 in 2028 from USD 2036 in 2018) and more inbound tourism by extending the e-visa facility to the nationals affordable options for both travel and accommodation, trends of 169 countries under five sub-categories. In 2019, 2.93 million in tourism have shifted from destination-based tourism to foreign tourists availed the e-visa services, a y-o-y growth of experience-based tourism. 23.6%. Shifting its focus from the generic Incredible India campaign, Visa fees were also rationalised with different fees for lean and Ministry of Tourism launched the Incredible India 2.0 campaign peak seasons to overcome seasonality challenges. to boost specific products within niche tourism such as cruises, adventure tourism, wellness and amongst others. The draft National Tourism Policy 2015 was envisaged with an objective to increase India’s foreign arrivals and boost tourism in the country. The policy outlined the importance of robust core (air, road, rail and water) and tourism infrastructure (Swadesh Darshan, PRASHAD, etc.) in addition to enhancing the positioning of India as a safe, secure and clean holiday destination besides creating employment and increasing community participation.

The Ministry of Tourism also launched a 24x7 toll-free tourist helpline available in 12 languages to support travellers in obtaining information and lodging complaints. In addition, certain states have instated Tourist Police to support travellers and ensure their safety.

In order to educate stakeholders in the tourism industry, the Ministry