SECTOR PROFILE

WHY INDIA?01

CHAMPION SECTORS02

PROFILE03

INVESTMENT OPPORTUNITIES04

BUSINESS & REGULATORYENVIRONMENT IN INDIA

05

WHY INDIA?01

ADVANTAGE INDIA

Worlds largest democracy with

1.3 billionpeople

Expertise acrossa spectrum of

services

Largecompetitively-priced skilled

talent pool

Large andgrowing domestic

consumermarket

Demonstratedcapability to deliver

high-quality,cost-effective

solutions

Integrated taxstructure

Enablingbusiness

environment

Focus oninfrastructuredevelopment

Access totechnology

INDIA - A FAVORED INVESTMENT DESTINATION

Fastestgrowing major economy in the world in 2018 and 2019

6th largest economy in the world by nominal GDP and 3rd largest economy globally by PPP

1st rankglobally in inward greenfield FDI inflows in 2016

India ranks 8thin global services exports accounting for 3.4% ofworld trade incommercialservices

Services,

57%

Automobile, 5%

Pharma, 4%

Power, 4%

Others,

26%

Chemicals, 4%

Agriculture17%

Industry22%

Services61%

6.1

60.1Mauritius, 34%

Singapore, 17%

Japan, 8%

%UK, 7%

USA, 6%

Netherlands, 6%

Others,22%

India’s GDP is likely to touch US$ 5 trillion by 2025

2.6

4.7

2017 2023

GDP in current prices (US$ Trillion) GVA share of sectors in FY18

43.2

163.1

27.8

95.7

2004-05 2016-17

Exports

Imports

Services Trade (US$ Billion)

14%

10%

1%

1%74%

Category-wise Services Export (2016-17, % share)

17%

15%

1%1%

66% Travel

Transport

Insurance

G.n.i.e

Miscellaneous*

Category-wise Services Import(2016-17, % share)

Gross Foreign Inflows-FDI (US$ Billion) Top FDI source countries (% share in inflows- Apr’00 to Mar’17)

G.n.i.e- Government not included elsewhere; * includes software, business, financial and communication services

20

04

-05

20

05

-06

20

06

-07

20

07

-08

20

08

-09

20

09

-10

20

10

-11

20

11

-12

20

12

-13

20

13

-14

20

14

-15

20

15

-16

20

16

-17

Sector-wise FDI inflows (% share in inflows-Apr ‘00 to Mar’17)

75

60

45

30

15

0

Source: IMF, FDi intelligence report 2017, RBI, WTO

GROWTH ENABLERS

Growing domestic consumer base Large, young human capital base

Rising disposable income and urbanization More than 800 million people under the age of 34 years

Urb

an p

op

ula

tio

n (%

of

tota

l)

Pe

r-c

ap

ita I

nc

om

e (

INR

)

18,523

61,855

27.8

31.270000

60000

50000

40000

30000

20000

10000

0

32.0

31.0

30.0

29.0

28.0

27.0

26.0

2001 2011

Urban Population and Per-capita Income

Per capita income Urban population

Per-capita Income data pertains to 2001-02 and 2011-12Source: Census 2011, MOSPI

Size of the workforce (millions)*

37

35

27

1400

1200

1000

800

600

400

200

0

Korea Thailand Japan US Europe China India

2015 2025 (Projected) 2050 (Projected)

49

47

36 77

71

55

213

217

235

492

466

405

1008

984

795 860

985

1145

* Population aged 15-64 yearsSource: United Nations population statistics

CHAMPIONSECTORS

02

Transport

& Logistics Healthcare Accounting

& Finance

Construction

& Related

Engineering

Services

Media &

Entertainment

Education

Services Financial

Services

Environmental

Services

Tourism

& Hospitality

IT & ITeS Legal

Services

Communication

Services

((( (((

INVESTMENT ANNOUNCEMENTS IN TOURISM AND HOSPITALITY SECTOR

• In 2017, Ctrip.com, China’s largest travel portal, invested USD 180 million in India's tourism &

hospitality sector, MakeMyTrip.

• During 2014-17, MakeMyTrip made a series of investments in small to mid-size travel technology firms

including EasyToBook.com, Simplotel, Mygola.com, Inspirock, HolidayIQ, and Bona Vita

Technologies Pvt Ltd.

• In 2015, Thomas Cook (India) Ltd. invested USD 84 million to acquire Kuoni Travel.

• In 2016, Goldman Sachs invested USD 66 million in Samhi Hotels group. Samhi operates 10 hotels

and is developing 16 more hotels across India.

• In 2015, Thailand-based establishment Onyx Hospitality set up a joint venture with Kingsbridge India

to set up 7 hotels in the country by 2018 with an investment of USD 100 million.

PROFILE:TOURISM AND HOSPITALITYSERVICES

03

INDIAN TOURISM AND HOSPITALITY SERVICES

In 2015-16, tourism and hospitality services

generated 1,125.1 billion of gross value added

(GVA), which is 1.1% of the total GVA of the

economy (Central Statistics Office).

Tourism and hospitality services attracted USD

916.1 million as FDI in 2016-17 (DIPP).

In 2016-17, India exported USD 23.2 billion

worth of travel services and imported USD

16.4 billion worth of travel services (Economic

Survey, 2017-18).

During 2016-17, net sales of tourism and

hospitality services, continued to rise and grew

by 2.7% (Economic Survey, 2017-18).

Source: Open Government Data Platform India, sourced from Department of Industrial Policy & Promotion (DIPP).

777

1332.7

916.1

0

200

400

600

800

1000

1200

1400

Years

Foreign Direct Investment in Hotel & Tourism (in USD million)

2014-15 2015-16 2016-17

FD

I (U

SD

Mill

ion

s)

TRADE IN TOURISM AND HOSPITALITY SERVICES

Outbound tourists were approximately 2.06

times of inbound tourists while the ratio

increased to 2.38 in 2017.

India's growth in outbound tourism is mainly

due to higher increase in income relative to the

cost of international airfare and travel

packages.

Increasing India’s connectivity with the world

has also helped in increasing outbound

tourism from India.

Improvements in safety and security, and

environmental conditions are important for

attracting tourists to India.

Source: Indian Tourism Statistics (various years), Ministry of Tourism.

Inbound/Outbound tourists to/from India (in million)

5.3 5.2 5.8 6.3 6.6 7.0 7.7 8.0 8.8 10.0

10.9 11.1

13.0 14.0

14.9 16.6

18.3 20.4

21.9 23.9

0

5.0

10.0

15.0

20.0

25.0

30.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Foreign Tourist Arrivals Outbound

Inb

ound

/Ou

tbo

un

d t

ou

rist

s (in

mill

ion

)

SOURCE - WISE AND TEMPORAL DISTRIBUTION OF FOREIGN TOURISTS ARRIVALS (FTAs)

Source: Indian Tourism Statistics (2015), Ministry of Tourism Source: Indian Tourism Statistics (various years), Ministry of Tourism

Bangladesh29%

USA18%

United Kingdom13%

Canada

5%

Australia4%

Malaysia4%

Sri Lanka4%

Russian Fed.4%

Germany4%

France3%

China (Main) 3%

Japan 3%

Singapore 2%

Nepal 2%

Afghanistan2%

Foreign Tourists Arrivals (FTAs) to India from top 15 source countries Month-wise distribution of average FTAs in the period 2001-17

Jan10%

Feb10%

Mar9%

Apr7%

May6%

Jun6%

Jul8%

Aug7%

Sep7%

Oct9%

Nov10%

Dec11%

• India is a popular destination for the tourists from Bangladesh followed by US and UK.

• There exists seasonality in tourist arrival. October to March are peak months for inbound tourism in India.

• Favorable climate and festivities are crucial factors attracting foreign tourists in the peak months.

INTERNATIONAL COMPARISON

Source: UNWTO Tourism Highlights (2017) Source: UNWTO Tourism Highlights (2017)

International Tourist Arrivals (ITA) in top 9 tourist destinations in the world and India in 2016 (in million)

International Tourist Arrivals (ITA) in top 10 tourist destinations in the Asia-Pacific in 2016 (in million)

• European countries attract higher number of FTAs vis-à-vis other countries of the world.

th• India ranked 24 in attracting FTAs in 2016.

• China is the leader in attracting FTAs in the Asia Pacific.

• India attracts approximately 4 times fewer FTAs than China.

82.6 75.6 75.6

59.3 52.4

35.8 35.6 35 32.6

14.6

0102030405060708090

Fran

ce (1

)

US (2

)

Spain

(3)

China

(4)

Italy (5

)

UK (6

)

Ger

man

y (7

)

Mex

ico

(8)

Thailand

(9)

India

(24)

59.3

32.6 26.8 26.6 24

17.2 15.7 14.6 12.9 10.7

0

10

20

30

40

50

60

70

China

(1)

Thailand

(2)

Malay

sia

(3)

Hon

g-Kon

g (4

)

Japan

(5)

Korea

(6)

Mac

ao (7

)

India

(8)

Singa

pore

(9)

Taiw

an (1

0)

TOURISM AND HOSPITALITY EXPORTS GENERATED USD 21.5 BILLION WORTH OF FOREIGN EXCHANGE (FOREX) IN 2015

In terms of value of forex, India is a net

exporter of tourism and hospitality services

during 2008-15.

Despite lower inbound compared to outbound

in terms of number, the foreign exchange

earned from inbound in USD is higher (USD

21.5 Billion) as compared to spending by

outbound Indians at (USD 17.7 Billion). This

means foreigners coming to India are spending

more per head on an average than Indians

spending on foreign visits.

India’s net export position in travel and tourism

is largely due to lower purchasing power of

Indian tourists travelling abroad relative to the

purchasing power of inbound tourists to India.

Source: World Bank

Foreign exchange earnings (FEEA) Vs Foreign exchange expenditure (FEEX) (in USD billion)

Valu

e in

US

D b

illio

n

12.5 11.1

14.5

17.7 18.3 19.0 20.8 21.5

12.1

9.3

10.5

13.7

14.1 13.9

17.5 17.7

0.0

5.0

10.0

15.0

20.0

25.0

2008 2009 2010 2011 2012 2013 2014 2015

Year

FEEA FEEX

COUNTRY - WISE NET TOURISM EXPORTS (USD BILLION)

Top ten tourist destinations

in the world, except China,

UK, and Germany, are net

exporters of tourism

services by value.

Source: World Bank.

Net tourism exports (USD billion)

Country 2013 2014 2015 Export-Import position

China -76.9 -129.3 -178.1 Net Importer

UK -19.3 -18.5 -18.9 Net Importer

Germany -50.2 -50.7 -41.5 Net Importer

France 12.6 7.4 7.2 Net Exporter

US 88.3 95 97.9 Net Exporter

Spain 46.2 47.1 39.1 Net Exporter

Italy 16.9 16.7 15 Net Exporter

Mexico 2.3 4.1 6.1 Net Exporter

Thailand 37.5 33.2 39 Net Exporter

Turkey 30.9 33.3 29.7 Net Exporter

India 5.2 3.3 3.8 Net Exporter

EMPLOYMENT SUPPORTED BY TOURISM

Tourism generated

approximately 67 million

direct and indirect

employment in 2013

Note: Data for 2008-09 is not available

Source: Tourist Satellite Account of India (1st TSAI for 2002-03 to 2007-08; 2nd TSAI for 2009-10 to 2012-13)

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

38.60

2002-03

40.60

2003-04

42.90

2004-05

45.10

2005-06

47.40

2006-07

49.80

2007-08

54.46

2009-10

57.94

2010-11

62.04

2011-12

66.96

2012-13

Year

To

urism

Jo

bs

- D

irect

an

d In

direct

(in m

illio

n)

TRAVEL & TOURISM COMPETITIVENESS INDEX (TTCI) RANKING (2017)

Source: Travel and Tourism Competitiveness Report (2017), UNWTO Tourism Highlights 2017 Source: Travel and Tourism Competitiveness Report (2017), UNWTO Tourism Highlights 2017

TTCI ranking for top 10 tourist destinations and India (2017) TTCI ranking for top 10 tourist destinations in Asia Pacific (2017)

1 France 2

2 United States 6

3 Spain 1

4 China 15

5 Italy 8

6 United Kingdom 5

7 Germany 3

8 Mexico 22

9 Thailand 34

24 India 40

Rank by FTAs (inbound) (2016)

Countries TTCI rank (out of 136)

1 China 15

2 Thailand 34

3 Malaysia 26

4 Hong Kong (China) 11

5 Japan 4

6 Korea (ROK) 19

7 Macao (China) -

8 India 40

9 Singapore 13

10 Taiwan (Part of China) 30

Rank by FTAs (inbound) (2016)

Countries TTCI rank (out of 136)

INVESTMENT OPPORTUNITIES

04

WHY INVEST IN TOURISM AND HOSPITALITY INDUSTRY ?

• India has significant pool of skilled workers and there exists immense opportunity in

tapping India’s demographic dividend.

• Promoting local industries, which are characterised by higher profit margin, offer

significant potential for investing in tourism and hospitality services.

• Higher return on investment in tourism and hospitality services is another attraction.

INVESTMENT AVENUES IN TOURISM AND HOSPITALITY INDUSTRY

• There is an enormous potential for MICE Tourism due to the huge cultural and geographical

diversity in India. The growing demand for MICE Tourism can be met through investments in

infrastructure which would help to realize the full potential of MICE.

• Investment in infrastructure such as ICT and tourist service infrastructure offers many investment

opportunities.

• Eco-tourism is becoming increasingly popular among foreign tourists and India’s endowment of

natural resources positions it as a prime destination for the same.

BUSINESS & REGULATORY ENVIRONMENT IN INDIA

05

REFORMS FOCUS

Fiscalprudence andaccountability

Integratedtax

regime

Enabling Ecosystem

Servicespush

Job creation and inclusive

growth

REGULATORY ENVIRONMENT - INDIA

Foreign Investment Framework

• Governed by Foreign Exchange Management Act, 1999

• Progressive liberalization in the policies

• Automatic route (No prior approval requirement) such as railway and road infrastructure

• Approval route (Prior government approval required before setup) such as multi brand retail trading

Foreign Direct Investment (FDI) in India

Evolution of foreign investment regulations

FDI INVESTMENT ROUTE

Under Automatic Route Prior Approval Route

No requirement of any prior regulatory approval

Filing an intimation with RBI in prescribed format within 30

days of investment

Filing particulars of issue of shares within 30 days of issue

of shares to foreign investors

Filing an intimation with RBI in prescribed format within 30

days of investment

Filing particulars of issue of shares within 30 days of issue

of shares to foreign investors

Required approval from Govt. of India – Considered by respective Administrative Ministry/Department.

BUSINESS PRESENCE IN INDIA - FORM OF ENTITIES

Establishes local presence

Operates as a foreign company

Foreign Company

Liaison Office Project Office Branch Office Joint Ventures Limited Liability Partnership

Wholly Owned Subsidiary

Key considerations for choosing

investment vehicles

• Commercial considerations

• Regulatory framework (prior approval requirements for Chinese companies)

• Tax considerations

• Cost of operations{

This Report has been prepared by CII.

IT & ITES