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Tourism as a Key Sector for India's Economic Development

Author: Mr. Pradip Madhavji, Chairman of the Tourism and Hospitality Committee of the Indian Merchants’ Chamber and Chairman of Indian Ocean Tourism Organisation, Muscat

Tourism is branded as the fastest growing industry in the world today. It is well known that Tourism Industry plays a very vital role for

•     Foreign Exchange earring for the country particularly when the visitor traffic is generated from developed to developing countries. 

•     Generation of employment both direct and indirect.It creates opportunities for job creation in many related industries. It provides support to the local population by promoting local handicrafts leading to diversion of income from other unethical means of survival. 

•     Regional Integration by promoting flow of tourist traffic within the eight countries of the SAARC Region.

People across the world now have the mobility and the means to support their desires to travel abroad on business or on pleasure. Increased earning with diminishing returns on savings has resulted in the emergence of the urge to explore newer geographical areas in anticipation of relaxation. A recent survey reveals that a large number of older generation are potential travellers because they have three basic essential ingredients for overseas travel such as:




The devaluation of the Rupee against major foreign currencies will support our efforts to generate larger flow of traffic from abroad.  We should also take the advantage of diverting holiday traffic to us from countries affected by internal strife and perceived terrorist attacks such as Egypt and Thailand. 

The focus now appears to have shifted worldwide to cater to International travel on business -- the ratio of Business travel to Leisure travel is currently around 70 - 30.   With this background I firmly believe that we should be widen the base of Inbound "Tourists" to cover foreign "Visitors" which would have a wider coverage to include foreigners travelling on business, studies as also for medical treatment..

The current trend however is for travel to countries in the middle haul destinations. Besides the leisure travel has witnessed holidays for shorter duration at fairly frequent intervals rather than going for a long duration holiday..The Group Inclusive Tours [GITs] are on a decline and are being replaced by FIT travel where a close knit family of four or close friends travel together on a specially crafted itinerary. 

It is essential that we understand the "Needs" of the travelers rather than restrict ourselves to his specific "wants". This will lead to Repeat Visitors who are our best "Ambassadors". We should also look at extending the average duration of stay of the visitors to the sub continent..

The growth pattern of foreign exchange earnings generated by Tourism has substantially increased in the recent past with the result that the average earning per foreign visitor to our country is now at US$ 2,400 + which is much higher than the world average of US$ 950.The average stay of foreign visitors to our country is also relatively high at 23 days. The focus of the Government should therefore be on ways and means of increasing foreign exchange earnings rather than increasing the number of foreign visitors to our country. 

Suggested strategies for embarking on aggressive marketing approach to promote the destination:

"Stand Alone" approach. 

"Stop Over" destination  --  connectivity to other popular destinations 

"Joint Promotion" with neighbouring countries.

For the corporate sector, let us make an attempt to promote India as an ideal destination for holding conferences, business meeting, trade fairs exhibitions and Incentive travel as a reward for successful distributors. Incentive Travel has Tax Advantages....Tax Deductible expense for the Company and is a Non Taxable Perquisite to the recipient.

With the current inadequacies in the country's infrastructure we have nor succeeded in promoting India as a preferred destination for holding large International Conferences. 

Recent trends in tourism promotion indicate that India is now firmly placed in the tourism map of the world.  Unfortunate events in the recent past have adversely affected the tourism industry in countries such as Egypt and Japan, As result they have witnessed a slow down of international traffic to these destinations. It is an opportune time now for us to ensure that attempts are made to divert the international traffic to the Indian sub continent.

The pace of increase of foreign visitors to our country has remained static, but the figure of foreign exchange earnings from Tourism has multiplied over the years. The 6 million plus foreign visitors to our country, give us earnings in foreign exchange in excess of 15 billion dollars annually.  In other words, the average spend per foreign visitor to our country is US$ 2,400 +.  This is higher than the world average, which stands at around  US$ 840 per visitor.

I firmly believe that three issues listed hereunder, are the key factors responsible for increase in flow of foreign tourist traffic to the country.  

Direct air connectivity

Hassle free issue of entry visas

Marketing of the destination

The first two are controllable factors, with the result that we now need to focus our attention on promotion and aggressive marketing particularly in tourism generating markets.  

It is essential that the Tourism Promotion Board maintains a close rapport with the entry visa processing department at our Embassies abroad in the tourism resource countries.  Issue of hassle free entry visa particularly for business travel needs the focus of the Ministry.   Also maintain a close bond and secure support for mutual benefit from  

Travel Trade Media --  both print and electronic 

Travel Trade Bodies  

National Air carrier and invoke financial support from other International Carriers. 

Arrange Familiarization Tours to India for identified leading tour operators and media representatives from source countries.

The vital role played by "TOURISM and HOSPITALITY" industry deserves due recognition by the Government more particularly for the support it provides for:

Regional Integration. 

Foreign Exchange Earnings 

Generation of Employment

Based on the assumption that in excess of 70% of foreign visitors to India currently travel on Business, we need to focus on issues related to substantial improvement in basic facilities required to upgrade infrastructure to firmly place India as the preferred destination for:

Business Meetings 

Trade Fairs 




In recognition of the catalyst role played by Indian Tour operators supported by Hotel Chains and Transport Operators in marketing India as the destination of tomorrow and diverting the flow of visitor traffic to India, they need special tax incentives particularly related to their earnings in foreign exchange. 

The need of the day is generation of clearly earmarked funds for investing in time bound proramme for 

Additional hotel rooms of the approved category 

Convention Centres 

Deluxe Coaches for transportation 

Airport connectivity and Facilitation  

Currently the country is experiencing paucity of reasonably and competitively priced hotel rooms. As such the Hotel Industry needs special support to attract investment by announcing tax concessions and making available related infrastructure such as

Land at concessional Rate 

Increased FSI 

Granting Export Industry status 

Relaxing rules applicable under CRZ [Coastal Regulation Zone] 

Creating and giving support for hospitality related learning Institutes 

The Finance Ministry must actively look at offering Tax Incentives by announcing tax concessions/exemptions on earnings by them in foreign exchange if invested by them within a specified period of time in tourism related infrastructure projects. . The time limit for investment should be clearly defined and the infrastructure projects clearly identified to qualify eligibility for tax concessions. Such measures will undoubtedly result in additional investment by the Tour Operators in playing an active role in aggressively marketing the destination in identified tourism generating countries.

Pharmaceuticals and Medical Device Manufacturing Continue to Drive Growth in Healthcare NKEA

Health Minister, YB Datuk Seri Dr. S Subramaniam held his second project update in 2013 today in his capacity as the lead Minister of the Healthcare National Key Economic Area (NKEA) under the Economic Transformation Programme (ETP), involving ten new projects. Collectively, these ten projects have recorded RM1.09 billion in investments and are expected to result in gross national income (GNI) impact of RM673.9 million and the creation of 1,219 incremental jobs by 2020. 

Since the inception of the ETP in 2010, a total of 37 projects have been announced under the Healthcare NKEA by the Prime Minister. These projects which have attracted investments of up to RM4.39 billion are expected to contribute GNI of RM6.65 billion and create 26,665 new jobs by 2020.
The Health Minister remarked that moving forward, the pipeline for 2014 remains positive.
“We have already started evaluating a number of projects that will be announced early next year,” he said.
During his speech during the Healthcare NKEA update, the Health Minister said that private sector players are well-poised to harness the opportunities available in this industry due to rising demand in healthcare services and products.
“As partners of the private sector, The Ministry of Health and relevant agencies under the guidance of the NKEA Healthcare Steering Committee have been working hard to ensure a more conducive environment for industry growth in several areas,” he said.
Among others, this includes the introduction of the Offtake Programme for pharmaceutical manufacturers participating in the ETP; the introduction of a new entry point project for Renal Products and the full conversion of a Business Opportunity under the Healthcare NKEA for Seniors Living into three implementable EPPs which are EPP 15: Mobile Healthcare Services, EPP 16: Integrated Residential Care Centre (IRCC) and EPP 17: Retirement Villages.
(Source: PEMANDU)
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