The Underserved Growth Opportunity, ETTravelWorld

The services sector has played a major role in driving India’s exports in recent years, especially as merchandise trade slowed amid geopolitical uncertainty and rising protectionism. India accounted for 4.3% of global services exports, ranking 8th among the largest services-exporting countries worldwide. According to the World Travel and Tourism Council, India’s tourism sector contributed 6.8% of GDP and generated 9.2% of total jobs in 2024.

While telecommunication, computer and information services account for the highest share has a 47% share in India’s services exports, a segment like travel services has a huge role to play with a share of 9.3% of total services exports while having a multiplier effect in economic growth, employment generation, and regional development.

According to the World Travel and Tourism Council, India’s tourism sector contributed 6.8% of GDP and generated 9.2% of total jobs in 2024.

Tourism is also explicitly referenced in Sustainable Development Goals (SDGs) while focusing on inclusive and sustainable economic growth, responsible consumption and production, and the conservation and sustainable use of oceans and marine resources.Available potential

In fact, India’s travel services exports grew at a strong pace of 15% over the past decade, reaching US$ 35 billion in 2024. It is the third-largest category after telecom and computer services and business services.

Data shows that India just holds a relatively small global share of just 2.1% and ranks just 15th in travel and tourism services, thereby highlighting the sector’s considerable untapped potential. India also faces stiff competition from other global travel hubs. For instance, India’s tourism receipts grew by 14% compared to 2019, while Saudi Arabia, previously a smaller player, registered 150% growth, surpassing India in 2024.

It may also be observed that China accounted for the highest outbound tourism expenditure globally in 2024 but remains underrepresented in India’s inbound tourism profile.

Leisure and recreation accounted for the largest share of Foreign Tourist Arrivals (FTAs) in India at 45%, followed by visits by the Indian diaspora (28.5%). Business and professional travel comprised 10.5%, while medical tourism represented 6.5% of total foreign arrivals in 2024. Nearly 4.4 million foreign tourists visited India for leisure, holidays, and recreation, underscoring India’s position as a prominent global destination for cultural and vacation experiences. Notably, Bangladesh contributed over 27% of leisure tourists, followed by the US, UK, Malaysia, and Australia, which together accounted for 60% of India’s leisure tourism.

Maharashtra led the country in attracting foreign tourists, accounting for 18% of total visits, followed by West Bengal (15%), Uttar Pradesh (11%), Gujarat (11%), and Rajasthan (10%).

Beyond leisure, India is also increasingly emerging as an attractive destination for medical and wellness tourism, with people coming from from South Asia (20%), Africa (19%), and the Middle East (18%), strengthening India’s reputation as a hub for affordable, high-quality healthcare.

Another growing segment is MICE tourism (Meetings, Incentives, Conferences, and Exhibitions), with major source countries including the USA, Japan, UK, Sri Lanka, and Germany.

India’s foreign tourism potential

India has also become the 10th largest outbound tourism market globally, with spending reaching US$ 33 billion, reflecting a strong appetite for travel among Indians. Driven by a growing young population and rising disposable incomes, 43% of outbound travel is for leisure and recreation.

India’s tourism sector holds immense potential, underpinned by its cultural richness and ecological diversity. With landscapes spanning mountains, deserts, coastlines, and backwaters, the industry offers enormous opportunities for growth. Conducive government policies have supported infrastructure development, improved connectivity, and enhanced ease of doing business in tourism. However, significant scope remains to elevate India’s position as a global tourism destination.

Competitive landscape

The Travel and Tourism Development Index (TTDI) report by the World Economic Forum (WEF), published in May 2024, ranked India 39th among 119 countries. India’s strengths lie in natural and cultural resources, affordability, and transport infrastructure. Yet, its position is lower compared to Asia-Pacific nations such as Japan (ranking 3rd), Australia (5), China (8), Singapore (13), Republic of Korea (14), Indonesia (22), New Zealand (25), and Malaysia (35).

Although Thailand, Vietnam, and Sri Lanka ranked below India, they remain strong competitors, offering similar attractions and well-established niches like medical tourism and MICE, besides leisure travel. For instance, Thailand accounted for 2.5% of international tourist receipts in 2024, higher than India.

India scored lower on parameters such as business environment, tourism infrastructure quality, ICT readiness, environmental sustainability, and skilled human resources in tourism. This in essence underscores the importance of such parameters which would enable Indian travel and tourism sector to evolve to global standards.

India’s tourism ambitions and strategies

Addressing these challenges requires coordinated action from government and industry stakeholders, including targeted financial support through subsidies, concessional loans, and fiscal incentives.

In fact, an Exim Bank study titled “Namaste India: Unleashing its Travel and Tourism Potential” calls for a dedicated National Tourism Policy, drawing on global best practices in skilled manpower development and technology adoption. It also recommends developing niche segments of international standards, such as adventure tourism, community-based tourism, medical and wellness tourism, and positioning India as a global MICE destination, supported by targeted marketing and promotions.

India with over 20 million international tourists, still has less than 1.5% share in global tourist arrivals, something which demands attention given the huge untapped potential in this diverse country with so much flora and fauna.

The country has set an ambitious target of achieving a US$ 3 trillion tourism economy and attracting 100 million international tourists by 2047 as part of its Viksit Bharat vision. Realizing this potential requires strategic and coordinated efforts, as tourism can also play a vital role in creating employment opportunities for women and youth, while also supporting MSMEs.

The authors are Economists with India Exim Bank.

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