After years of being lauded as being part of the famed BRIC countries, India is starting to demonstrate signs of being on the cusp of realising the grandiose status that was predicted. In June 2017, retail sales to Indian tourists saw gains in sales of 35%, with double-digit gains in all major destination markets. Whilst the UK currently benefits from being the primary destination choice for Indian tourists to Europe, the German National Tourist Office (GNTO) has recognized the growing potential of these tourists as evidenced by the 84% growth of these tourists between 2007 and 2015, and has in recent years conducted roadshows in India, and more recently organised a three city roadshow in India to take place in September of this year.
This article explores some of the reasons why there is a growing belief that India is on the precipice of entering into the upper echelons of international travelers and shoppers in the near future.
At the end of 2016, the Indian economy ranked as the 7th largest economy in the world, and moving into
2017, is espoused to be the fastest growing economy, amongst the large economies of the world. This growth is expected to move it marginally ahead of France into 6th position by the end of 2017. A recent report by PwC titled ‘The long view: how will the global economic order change by 2050?’, explores the dramatic changes expected in the global financial and economic landscape. The Chinese economic growth story is predicted to continue, particularly with it’s ‘One Belt, One Road’ (OBOR) initiative, to see this nation become the dominant force in 2030. The report also suggests that India will become the 3rd largest economy in the world by 2030, and on a Purchasing Power Parity (PPP) basis leapfrog the United States into 2nd position by 2040.
The transition to a digital revolution
Pre 2009, it was reported that half of India’s population did not have any form of identification as a result of not registering births and without identification, they were unable to open a bank account, register for insurance, obtain mobile phones, obtain passports, etc. The government created a system called Aadhar which not only brings these millions into the formal economy, but also gives these individuals a digital proof of identity, authenticated by digital fingerprint and retina scans. It is believed that there are now 1.1 billion citizens registered (95% of the population), making it the most ambitious and comprehensive database in the world.
Further technological advancements in 2016 saw the introduction of India Stack, a series of secured and connected systems that, based on their Aadhar registration, allows people to store and share personal data such as addresses, bank statements, medical records, employment records, and tax filings and it enables the digital signing of documents; essentially an alternative and real world application of blockchain technology.
The de-monetisation actions in November 2016 had the stated aim of Indian authorities being to reduce the informal black market economy, but this move has also served to re-capitalise Indian banks, bringing millions into the formal economy, but more importantly, accelerating the transition from a cash based economy to embrace digital payments, that in turn, is likely to have a positive impact on seamless and easy online travel bookings. With the recent introduction of a nationwide Goods & Services Tax (GST) on 1st July 2017, India has set the stage for increasing tax revenues and therefore increased investment, facilitating millions to enter the formal economy, and removing the bureaucracy in commerce, to lay the foundations for accelerated and sustained economic growth for years to come.
The population, and emerging middle classes and cities
Concurrent with its rising GDP growth, India’s current population of 1.1 billion is expected to surpass China as the world’s largest in the next five years, and with its young and tech-savvy expanding middle class predicted to reach 547 million shortly thereafter, India will also rank as the world’s youngest country demographically, with an average age of 29. Incrementally to the significant proportion of Indian tourists travelling to visit family and friends, with an ever expanding Indian diaspora represented by more than 20 million nationals now living throughout the world, the sheer size of the expanding middle class, already believed to be greater than the population of the United States, suggests the growth story of Indian outbound travel will continue for the next 20 years. Furthermore, traditionally, globetrotting Indians tended to come from Tier 1 cities such as New Delhi, Mumbai, Chennai and Bangalore, but lately smaller cities like Jaipur, Ahmedabad and Amritsar are emerging as important source markets for outbound travel.