A new report by Crisil Intelligence highlights the critical role of micro, small and medium enterprises (MSMEs) in unlocking the full potential of India’s tourism industry. While the sector employs a large workforce and attracts billions of visits, its economic contribution remains smaller than expected, and more substantial support for MSMEs could help change that.
According to the report, tourism accounted for more than 13% of the workforce in 2024 and saw nearly 3 billion visits. Yet, its share of India’s gross domestic product (GDP) was only around 5% — well below the global average of 10%. This shows that while visitor numbers are high, the sector’s value creation and income generation are limited.
MSMEs are at the heart of India’s tourism ecosystem. They operate in areas such as hotels and accommodation, local transport, food services, guiding services, crafts and cultural experiences — making them vital to delivering quality travel experiences and distributing tourism income across both cities and rural areas. However, many of these enterprises face barriers, including limited access to finance, skills and market opportunities, which restrict their ability to grow and offer year-round employment.
The report emphasises that strengthening destination infrastructure, improving service quality and integrating MSMEs into formal tourism value chains can help convert high visitor numbers into higher earnings and more stable jobs, particularly benefiting women and youth. Enhancing safety, hygiene and overall destination management could also encourage visitors to spend more and stay longer.
Crisil comes to the conclusion that in order for India's tourism industry to transition from a volume-driven to a value-led model and realize its full economic and livelihood potential nationwide, supply-side support—such as better access to financing, focused skill training, and improved connectivity between tourist circuits—is crucial.
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