By Pradeep S Mehta and Madhvendra Singh Panwar
Prime Minister Narendra Modi’s appeal for austerity urging Indians to conserve fuel, reduce avoidable foreign expenditure, and support economic resilience was not merely a symbolic patriotic message. Read carefully, it was an economic signal to maintain our foreign exchange balances, as well as a boost for the LiFE sustainable consumption campaign.
Behind the language of national responsibility lies a deeper macroeconomic and climate concern: India is entering a phase of elevated external vulnerability driven by geopolitical instability, volatile oil prices, supply-chain uncertainty, and pressure on the balance of payments, as well as the challenges to reduce utilisation of fossil fuels.
India imports nearly 85% of its crude oil requirements. Every rise in global crude prices widens the import bill, pressures the rupee, and complicates inflation and environment management. In such circumstances, governments often attempt parallel responses like emission cuts, compression of avoidable forex outflows, and expanding foreign exchange-earning sectors besides the carbon-friendly renewable energy system. This is where tourism assumes strategic importance.
India continues to treat tourism largely as a hospitality or cultural sector. However, successful economies increasingly view tourism as a macroeconomic instrument capable of generating non-debt forex inflows, supporting employment, strengthening regional economies, and stabilising external sector vulnerabilities. In terms of climate impact, it helps disperse carbon emissions.
According to the ministry of tourism and RBI estimates, India earned `2.93 lakh crore in forex earnings from tourism in 2024, while foreign arrivals crossed 9.95 million. Even before recovering to pre-pandemic levels, tourism, including eco-tourism, re-emerged as one of India’s strongest service export generators.
Every foreign tourist entering India effectively brings foreign currency into local economies—supporting hotels, transport operators, handicrafts, restaurants, guides, aviation, wellness centres, rural tourism networks, and MSMEs. Economically, these are “clean” forex inflows with high employment multipliers.
The World Travel & Tourism Council estimates that tourism contributes significantly to employment generation because of its labour-intensive nature across formal and informal sectors. In developing economies, tourism often generates sustainable jobs faster than manufacturing due to lower entry barriers and wider regional spread. This becomes particularly important for India, where employment generation remains one of the central developmental challenges.
Yet India continues to underperform.
Thailand receives tens of millions of international tourists annually and has strategically used tourism receipts to strengthen its external account stability. Spain treats tourism as a core pillar of economic resilience and forex generation. Dubai, Singapore, Maldives, and Saudi Arabia are other good examples of progressing their economies greatly through tourism. The common lesson is that tourism succeeds when treated as economic infrastructure, not merely as cultural promotion.
India possesses extraordinary comparative advantages. Yet it attracts fewer foreign tourists than several much smaller economies.
The reasons for this are structural.
India’s tourism policy architecture remains fragmented across ministries, states, and departments. Urban tourist management remains inconsistent. International branding is weak compared to competitors. Aviation connectivity to tourism circuits is uneven. Convention and MICE (meetings, incentives, conferences, and exhibitions) tourism infrastructure is limited. Visa liberalisation remains inadequate despite progress through e-visas, and high-value experiential tourism is underdeveloped.
More importantly, India has not yet fully linked tourism strategy with broader economic and green diplomacy. This is a major policy gap.
Modern tourism growth is deeply connected with FTAs, bilateral air service agreements, global mobility frameworks, international marketing partnerships, and investment promotion policies. Tourism is not viewed separately from economic statecraft.
If India seeks to emerge as a global manufacturing and investment destination amid supply-chain diversification away from China, global perception matters enormously. Tourism plays a direct role in shaping investor familiarity, business confidence, and international engagement.
Moreover, tourism expansion offers India a faster route to decentralised economic growth than many capital-intensive sectors. In economic terms, tourism produces a strong multiplier effect.
The tourism ministry’s latest data also demonstrates that tourism recovery is increasingly being driven by higher-spending markets such as the US, the UK, Japan, and Australia. This is significant because India’s long-term objective should not merely be increasing tourist numbers but increasing per-tourist expenditure and average length of stay. We need better attention to China which is sending out large number of tourists.
We need a strategic shift from “mass tourism thinking” to “high-yield tourism economics”. What India now requires is a coherent national tourism strategy, with a granular road map, that treats tourism not as a peripheral ministry subject but as a strategic economic sector central to foreign exchange resilience, employment generation, and long-term economic sovereignty which is climate friendly.
The authors work for CUTS International, a public policy research and advocacy group.
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