Seeking tourists, India launches makeover campaign

Mary Gilbert would love to visit India, but she hesitates.

"I have very mixed impressions of India," says the small-business owner from Cincinnati. "I would want to go to see the beauty. And I'd like to experience the culture." But then her reservations, like those of many Westerners, bubble to the surface: health concerns, difficult living conditions, and poverty.

It's an image India - one of the world's fastest-growing economies, and a nuclear power eager for a permanent seat in the United Nations Security Council - wants to shake off. Going on a major makeover offensive, the country jacked up its tourism budget from Rs.500 crore ($116.3 million) last year to Rs.786 crore ($182.79 million) this year.

"We're seeing tourism as a major area for employment and development," says Rajeev Talwar, director-general of the Indian Ministry of Tourism. Mr. Talwar is confident that the jobs and wealth tourism creates will efface India's searing pictures of poverty. "There's no better industry than tourism to provide employment in every corner," he says. According to the World Travel and Tourism Council, the travel and tourism industry in India is expected to generate $121.4 billion in economic activity and 26 million jobs by 2015.

Indian President Abdul Kalam has set the country a target of luring 15 million foreign tourists per year in five years - an ambitious jump from the 3.7 million visitors India welcomes each year.

India has budgeted $674.4 million for tourism over a five-year period from 2002-2007 - $250 million of which has already been spent. Prior to 2002, the tourism budget was just $23.25 million per year, according to the Planning Division of the Indian Ministry of Tourism.

Despite increases in the budget, there hasn't been "much progress," according to Tej Vir Singh, director of the Center for Tourism Research and Development in Lucknow. "In the last three to four years, we haven't been able to go beyond that [figure of] 3.7 million [tourists].

Mr. Singh approves of the direction of India's tourism drive, but he's skeptical about its eventual result. "It's a difficult idea to translate into action," he says. "Most of the jobs will go to the well-to-do."

British economist Roger Bootle says the Asian giant's current economic growth spurt prompts a comparison with 1950s America. "What America was then, India and China are now," he says. "So many people in the West just haven't cottoned on to how much India is growing."

Lalit Suri, chair of the World Travel and Tourism Council's (WTTC) India Initiative, says hosting a high-profile tourism summit, as India did in early April, brings key players in the global travel industry to see for themselves what the country can offer. "If you bring them here, then you can change perceptions."

According to Tourism Minister Renuka Chowdhury, investments of more than $10 million to build new hotel rooms and $60-70 million to spruce up the country's poor infrastructure are needed.

India is trying to woo foreign investors, but some remain wary of what they see as a rocky path of doing business in India. "There's a perception that the business environment here is much harder," says Henrik Bartl, head of real estate structured finance at Aareal Bank in Germany.

To change that, the Indian government is smoothing bureaucratic ridges. "One hundred percent foreign direct investment is permissible in tourism and hotel sectors in India," says Ms. Chowdhury.

Regional diplomacy could also get a boost with the "soft power" that tourism has. "A unique dimension of travel and tourism is that where tourists cross borders, soldiers vanish," says Suri.

According to WTTC research, India's tourism industry is expected to grow 8.6 percent per year between 2006 and 2015.

Singh, however, is critical of these peachy forecasts. "When the government speak about tourism, they're too optimistic. Their projections are hyperbolic."

But investors' eyes are on India for the potential it holds if economic reforms continue. "Six times as much money is waiting to go into India as has already gone in," says Anais Faraj, a British-based global strategist at Nomura International.