Why India’s tourism sector needs a regulatory rethink

India’s monuments, mountains, beaches, and cuisine make it one of the world’s richest travel destinations.

- Amitabh Kant

Yet, its tourism performance lags behind many other countries, We attract just about 10 million foreign tourists a year, a number Thailand surpasses in three months. The gap lies not in appeal, but in competitiveness,

Compare like-for-like destinations: A four-star beach hotel in Goa averages %12,000-85,000 per night, while a similar property in Phuket or Da Nang costs half. Even Sri Lanka, despite instability, offers better value and satisfaction. India’s coastline is thrice that of Thailand in terms of length and its national park area is twice that of Kenya. Yet, it has far fewer tourist destinations or premium accommodations near such natural tourist attractions.

The reason is not entrepreneurial energy but regulatory density. Entrepreneurs face dozens of permission requirements, high excise charges, and lengthy approval cycles. A hotel may require 50 clearances — from fire and pollution to police and urban local bodies — while a restaurant needs 30. Even small operators in transport or water sports must navigate several NOCs. Projects that take 18 months in Southeast Asia can take three years in India, with capital costs that are 20-30% higher due to delays and compliance hurdles.

If India hopes to make tourism a $1-trillion industry and generate 50 million jobs in the next decade, its states must move from regulation to facilitation. Many reforms are straightforward; what's needed is mission-mode execution and recognition that tourism competitiveness depends as much on policy as on beauty.

Balance economy and ecology: India’s most appealing areas — beaches, monuments, forests, and water bodies — are also the hardest when it comes to setting up infrastructure. Three regulatory regimes fence off these spaces:

One, the Coastal Regulation Zone (CRZ) norms, which restrict construction within 200-500 meters of the high-tide line, treat small eco-resorts the same as concrete hotels.