India boasts of the world's highest mountains, miles of coastline with excellent beaches, tropical forests and wildlife, adventure tourism, desert safari, lagoon backwaters, ancient monuments and World Heritage Sites, forts and palaces, and of course, the Taj Mahal. The Indian tourism and hospitality industry has thus emerged as one of the key sectors driving the country's growth. The tourism sector is thriving, owing to a huge surge in both business and leisure travel by foreign and domestic tourists.

According to the latest Tourism Satellite Accounting (TSA) research, released by the World Travel and Tourism Council (WTTC) and its strategic partner Accenture, India's travel and tourism industry is expected to generate approximately US$ 100 billion in 2008 and almost US$ 275.5 billion by 2018, growing at an average of 9.4 per cent over the next ten years. Moreover, according to the TSA research, travel and tourism is expected to contribute 6.1 per cent to India's national gross domestic product (GDP) and provide almost 40 million jobs by 2018. Also, a country brand index (CBI) 2008 survey, conducted by FutureBrand—a leading global brand consultancy—in collaboration with public relations firm Weber Shandwick's Global Travel & Lifestyle Practice, has ranked India second in the value-for-money index.

The rapid growth of India's tourism industry has been instrumental in South Asia being the preferred tourist destination as noted by the UN World Tourism Organisation (UNWTO). Foreign tourist arrivals during the period January–October 2008 increased by 370,000 to 4.32 million as compared to 3.95 million during the corresponding period of 2007. Number of foreigners visiting India as tourists in October 2008 was 453,000 as compared to 331,000 in September 2008. Consequently, foreign exchange earnings from tourism in India rose from US$ 8.293 billion during January to October 2007 to US$ 9.696 billion during January to October 2008. Earlier, in 2007, total number of foreign tourists visiting India was 5.08 million - an increase of 14.3 per cent over 2006.

Inbound Tourists

The flow of foreign tourist arrivals has been recording phenomenal growth rates. The number of arrivals has increased from 3.9 million in 2005 to 4.4 million in 2006 and 4.95 million in 2007, recording a growth rate of 13.5 per cent in 2006 (over 2005) and 11.9 per cent in 2007 (over 2006). Alongside, there has been a concomitant rise in the foreign exchange earnings. Total earnings from foreign tourists has shown an annual growth rate of 19.2 per in 2006 and 33.8 per cent in 2007 to garner US$ 7.49 billion in 2005, US$ 8.93 in 2006 and US$ 11.96 billion in 2007.

Continuing the foreign tourists' interest in the country, the first four months of 2008 recorded a growth rate of 11.9 per cent (in tourist arrivals) over the corresponding period in 2007, receiving 2.02 million in foreign tourist arrivals. Simultaneously, foreign exchange earnings grew by a much faster rate at 28.9 per cent in 2008, against 20 per cent during corresponding period in 2007. Total foreign exchange earnings totalled US$ 4.84 billion, against US$ 3.76 billion in 2007. Significantly, while India's share in world arrivals was about 0.5 per cent, its share in revenue generated from tourism worldwide was over 1 per cent.

Outbound Tourists

A booming economy and increase in disposable income has led to a massive growth in the number of Indians travelling abroad. In 2007, 9.78 million Indians went abroad for tourism, an increase of 17.3 per cent over 2006. Indian outbound tourist flow is expected to increase at a compounded annual growth rate (CAGR) of 13.30 per cent during 2008–2012, according to a new report titled, "Indian Tourism Industry Analysis", by RNCOS, a leading market research and information analysis company.

Along with the rise in the number of Indians travelling abroad, both the total and per capita expenditure spent abroad has been increasing. For example, according to the European Travel Commission, average spend per trip of Indian outbound tourists has increased from US$ 611 in 2000 to US$ 822 in 2006. Similarly, Euromonitor International estimates the outgoing tourism expenditure from India to grow to US$ 21 million by 2011, representing a growth rate of over 25.7 per cent between 2006 and 2011.

Medical Tourism

"First World treatment' at Third World prices" is how industry sources define medical tourism in India. Although India is a recent entrant into medical tourism, it is fast catching up. According to a study by McKinsey and the Confederation of Indian Industry (CII), medical tourism in India could become a US$ 2 billion industry by 2012 (from US$ 350 million in 2006). Credit Suisse estimates medical tourism to be growing at about 25–30 per cent annually. Indian hospitals are fast becoming the first choice for an increasing number of foreign touristsand as per a Credit Suisse estimate, nearly 180,000 medical tourists were treated in India in 2004.

The key selling points of the medical tourism industry are its cost effectiveness and its combination with the attractions of tourism. Many travel agents are now selling combined packages of treatment and vacation. India has some of the best hospitals and treatment centres that are equipped with infrastructure and technology, which are at par with those in the US, UK and Europe at a fraction of the costs –only a tenth and sometimes even a sixteenth of the cost in the West.

In fact, according to the World Travel and Trade Council, Indian tourism demand will continue to grow at a rapid pace. It estimates the demand to grow at an average of 8.8 per cent between 2004 and 2013, making India the world's third fastest growing tourist market. The boom in the Indian tourism industry has cascaded to the rural areas as well. India continues to attract tourists owing to its splendid historical architecture and rich culture along with beautiful beaches, rural tourism or what now is called 'responsible tourism' is also fast gaining popularity with travellers flocking to discover the best in rural arts and heritage.