Tourism Sector: Role of Competition Policies and
Regulatory Reforms
BY
Dripto Mukhopadhyay
Director- Economic Research
Nielsen India
Tourism in India – Current Scenario
Indicator
Foreign tourists arrival in 2014
Growth in foreign tourists arrival over
previous year
Domestic tourists 2014
Growth in domestic tourists over
previous year
Foreign exchange earnings from tourism
activities in 2014
Values
7.68 million
10.2 %
1282 million
11.9%
INR 1,23,320 Crore
Grown by 14.5% over previous year
Share of India in World’s total foreign
tourists arrival
0.68%
Share of India in World’s total foreign
exchange earnings (UD$ terms)
1.58%
Source: Ministry of Tourism, Govt. of India
Tourism in India – Economic Importance
Year
% Share in DGP
% Share in
Employment
2009-10
6.77
10.17
2010-11
6.76
10.78
2011-12
6.76
11.49
2012-13
6.88
12.36
Source: Ministry of Tourism, Govt. of India
Central Government’s Mission and Vision for the
Tourism Sector
1) To achieve a level of 1% share of the international tourists arrivals by 2016-17
2) 1450 million domestic tourists by 2016-17
3) Promoting sustainable tourism as priority
4) Enhancing competitiveness of Indian tourism industry
5) Creating world class tourism infrastructure
6) Ensuring greater visibility for tourist facilities
7) Augmenting human resource base in the sector
Promoting Sustainable Tourism as
Priority
“Tourism in the Third World, as it
practised today, does not benefit the
majority of the people. Instead it
exploits them, pollutes the
environment, destroys the ecosystem,
bastardises the culture, robs people of
their traditional values and ways of life
and subjugates women and children in
the abject slavery of prostitution. In
other words, it epitomises the present
unjust world economic order where the
few who control wealth and power
dictate the terms. As such, tourism is
little different from colonialism”
- Srisang, 1992
What are the impact of nonregulated tourism?
Poorly managed tourism can lead to:
•
Degradation of heritage sites
•
Commodification of the sacred resources
•
Create a market for prostitution and drugs
•
Reduce biological diversity and environmental
degradation
•
Destroy habitats for wildlife
•
Pollute lakes and other water bodies
•
Overuse valuable fresh water resources
•
Contribute significantly to global warming
•
Leads to loss of scenic beauty and as a result loss of
tourist attraction in long term
What is Sustainable Tourism?
Sustainable tourism could be defined as tourism “which is developed and maintained in an
area (community, environment) in such a manner and at such a scale that it remains viable
over an indefinite period and does not degrade or alter the environment (human or physical) in
which it exists to such a degree that it prohibits the successful development and wellbeing of
other activities and processes”. - Butler (1993),
Hence, it should fulfil:
• Tourism industry must ensure that tourist visits will be maintained and
tourism resources will retain their attractiveness indefinitely.
• There must be no (or only minimal) adverse environmental, social and
cultural impacts.
• All these must be achieved through maintaining the principles of sustainable
development.
Why Tourism Sector is Unique in Nature and
A Challenging Sector for Policy Makers?
• Tourism activities are combination of large number of sectors that cuts across all
different domains of activities of common mass
• In contrary to other sectors, direct stakeholders for tourism activities are consumers,
producers and host community. Unlike other sectors or industries, tourism directly
affects entire community of a region positively as well as adversely, depending on the
nature of activities
• Even from governance perspective, tourism activities cut across many different
departments and hence fluidic in nature
• That is one of the prime reason why being top revenue earner as well as
employment generating sector, it is one of the most neglected sectors among all
economic activities from policy making perspective
Current Status of Tourism Policies in
India
• The latest Central Government policy still in practice is of 2002!!
• A policy was drafted in 2015 - circulated as Draft Tourism Policy 2015, but it
has disappeared from the tourism ministry’s official website also
• There are several boards constituted to develop or promote tourism in the
country, especially to attract foreign tourists, but any regulatory authority is
yet to be constituted
• Apart from Central Government, various state governments have their own
tourism policies with their own perspective to promote tourism in the states.
If one carefully looks at the state level policies, many of them are quite
contradictory to sustainable tourism development paradigm
• My personal experience says that even the top officials of many states that
are promoting sustainable tourism or eco-tourism are not even aware of the
definitions or pre-requisites of developing such practices
Competition/Regulatory Policies on
Tourism in India
• As can be understood easily from the from the situation, there is hardly any
policy that talks of competition explicitly regarding tourism sector
• However, at the Central Government level or at the state level, there are
several schemes for promoting tourism activities that can be studied for the
purpose from competition enhancement perspective
• But, there is no document that talks of a regulatory aspects which is
extremely crucial for tourism sector, since un-regulated tourism activities may
impact severely on welfare of a larger section of the host community
culturally as well as from environment perspective, while it increases welfare
of the tourists (consumers) and direct service providers (sellers/producers)
• That’s where a balanced competition policy with appropriate regulatory
measures are needed immediately to promote tourism activities that can be
win-win for every stakeholders
The Complexities
• Till now, there has hardly been any study done on tourism sector that
addresses regulatory aspects or competition aspects for Indian tourism sector
• The only study done in these areas is during mid-90s at IITTM which talks of
legislations relating to tourism sector. A portion of the list of legislation
involved regarding tourism sector is given in the next slide:
1. The essential commodities act, 1955,
2. Code of criminal procedure, 1973
3. The airport authority of India act, 1994
4. The child labour (prohibition and regulation) act
1986
5. The motor vehicle act, 1988
6. Foreign exchange regulation act, 1973
7. Consumer protection act, 1986
8. The environment (protection) act, 1986
9. The prevention of cruelty to animals act, 1960
10. The public liability insurance act, 1991,
11. The railways act, 1989
12. The sarais act, 1867
13. The immoral traffic (prevention) act, 1956
14. The employers liability act, 1938
15. The passport act, 1967
16. The wild life (protection) act
17. The prevention of food adulteration act, 1954
18. The monopolies and restrictive trade practices
act, 1969
19. Forest conservation act, 1980
20. The road transport corporation act, 1950
21. The central excise and sale act, 1950
22. The Indian partnership act, 1932
23. The urban land ceiling act, 1976
24. The industries (development and regulation)
act, 1951
25. The explosives act, 1884
26. The Indian penal code, 1860
27. The water (prevention and control of
pollution) act, 1974 & the air (prevention) and
control of pollution act, 1981
28. The Indian contract act, 1872
29. Development authority act
30. Municipal act
31. Ancient monument (site and remains) act,
1951
What are Required to be Addressed?
• Identifying key industries/sectors that are directly linked to tourism activities and less
with day to day life of common man, for instance:
• Hospitality sector
• Tour operators
• Other tourism service providers etc.
• To look into issues that are pro- or anti-competitive
• Policy distortions/conflicts affecting competition (national and/or state level policies)
• Prevailing anti-competitive practices in the tourism sector
• Possible impacts of such policies and practices on welfare issues
• For tourists (consumers)
• Service providers (producers)
• Host community
• Suggested measures towards regulatory and competition framework on selected
sectors that are directly linked to tourism activities exclusively