New Delhi: India’s tourism sector—already one of the fastest-growing engines of employment and travel demand—is facing structural constraints that inhibit its full economic potential, according to a report released by CRISIL Intelligence titled Tourism for livelihoods: Building circuits of growth in India.
The study highlights that while visitor volumes remain robust, the country’s tourism ecosystem needs stronger MSME facilitation and destination infrastructure to generate higher value and inclusive growth.
In 2024, tourism engaged more than 13% of the workforce and recorded nearly 3 billion tourist visits domestically, yet its contribution to gross domestic product hovered around roughly 5%, well below the global average of about 10%, the report shows. This gap points to poor conversion of scale into economic value.
MSMEs form the backbone of India’s tourism value chain, spanning accommodation, transport, food services, guiding and local experiences. However, many small operators remain constrained by limited access to finance, skills shortages, lack of formal market linkages and low service standards, restricting their ability to move up the value chain and create stable, higher-income livelihoods.
The report calls for targeted support to improve MSME capabilities, including easier access to credit, skill development programmes, and integration into formal tourism networks. It also stresses the need for investments in destination infrastructure—such as safety measures, sanitation, transport connectivity and quality hospitality facilities—to enhance visitor experiences and extend stays, particularly in tier-2 and tier-3 destinations.
Industry analysts say aligning policy support with private investment, especially for MSMEs and infrastructure projects, could help reposition India’s tourism sector as a higher-value, more resilient growth driver.
This would involve coordinated action by central and state governments, enhanced financing mechanisms, and initiatives to formalise and professionalise small-scale tourism businesses.
With domestic tourism demand projected to rise sharply and inbound travel gradually recovering, addressing these supply-side gaps could unlock significant economic and employment opportunities across regions.