The tourism industry is one of the largest industries in India and a significant employment generator. Many Indian states depend on tourism to generate their primary revenue. India’s tourism industry is ranked 12th among 184 countries in GDP contribution. It is set to grow at 7.8% per year from 2013 to 2023.
The tourism market in India is estimated at USD117.7 billion in 2011, and it is estimated to boom to USD418.9 billion by 2022. Thus, starting a tourism business is a good option for new entrepreneurs in India.
Starting with one of the 7 Wonders of the World, the Taj Mahal, there are several places in India that every person should see at least once in their lifetime. Thus, apart from having a huge scope for domestic tourism, India is a magnet for international tourists as well.
There are many states in India, like Goa and the northeastern states, where the state’s primary revenue depends on tourism. Other important cities like Delhi, Bangalore, and Mumbai have grown more and more cosmopolitan due to the influx of international tourists in the country.
Thus, taking all these things into account, tourism has become inevitable for the country’s revenue as a whole. However, making a mark in the tourism industry is not easy, and starting a travel agency involves a variety of steps and processes.
Types of Tourism Business in India
Adventure tourism
Millennials are the main target customers of adventure tourism. Adventure tourism is gaining popularity. It has the potential to grow when the travel operator approaches the business with creativity and provides unique adventure sports or activities to the youngsters.
Religious tourism
India is a religious country and home to many religious beliefs and rituals. People are looking for tour packages to visit monumental places of worship. The tour and travel business specialising in this field operates following local festivals like the Khumb Mela, Char Dham Yatra, etc.
Wellness tourism
Due to the modern-day lifestyle, people look for avenues to obtain intermittent resting of body and mind. Wellness tourism is a unique business idea that offers people an array of options for rejuvenation ranging from detox camps to rejuvenating centres.
Rural tourism
Rural tourism caters to people who want to experience the beauty of rural areas and be close to nature. The farm and vineyard visits, local cuisine, and activities for creating local crafts like pottery are some of the offerings of the rural tours and travel operators.
Heritage tourism
Indian and foreign tourists are keen to explore India’s historical monuments and buildings. Since UNESCO recognised many sites as ‘World Heritage Sites’ in India, heritage tourism is booming.
Licences Required to Start a Tourism Business in India
Business Registration
Travel agents or entrepreneurs wanting to start a tourism business should establish it as a legal entity by giving it a structure. They can choose from different structures to establish the tours and travel business, such as One Person Company (OPC), Limited Liability Partnership (LLP), private limited company, sole proprietorship or partnership firm.
Most travel agents choose to establish their business as a private limited company since it is one of the most recognised forms of business in India. A Limited Liability Partnership (LLP) or One Person Company (OPC) business structure would be ideal for entrepreneurs who plan to build the business slowly or do it part-time.
However, when entrepreneurs establish the business as a sole proprietorship or partnership firm, their liability is unlimited and can endanger personal assets in case of a financial crisis. Therefore, a public limited company, OPC or LLP, is preferred to establish a tourism business in India.
Travel agents today have many options of business entity to choose from and the business plan for the venture would play a major role in finding the right fit. Most travel agents choose to have a Private Limited Company as it is one of the most widely used and recognised forms of business in India, offering a host of benefits. A private limited company is definitely a must for entrepreneurs who have plans to offer their services online and quickly scale up their business – using the power of the internet. On the other hand, newly introduced business entities like Limited Liability Partnership (LLP) or One Person Company (OPC) would be ideal for entrepreneurs who have plans to slowly build the business and/or do it on a part-time basis. As Limited Liability partnerships have no requirement for audit unless the turnover exceeds Rs.40 lakhs in a year, it would be ideal for entrepreneurs who are getting their first-hand experience in their venture. On the other hand, OPCs act ideal for entrepreneurs who are establishing their business as a single individual who wants to avoid having extensive compliance requirements to follow. Either way, a business entity offering limited liability status and separate legal entity status act ideal for a travel agent.
Entrepreneurs can also opt for proprietorship’s with a trademark, in cases where the entrepreneur wants to have a unique brand name, that is unavailable to get the registration with Ministry of Company Affairs – due to the naming guidelines.
GST Registration
The tourism business needs to obtain GST registration and collect GST from the customers on the service incurred through the business. The transport and restaurant services provided by tour operators attract GST. Thus, the travel business must mandatorily register under the GST law.
Government Approved Travel Agent Registration
Travel agents and entrepreneurs establishing a tourism business can register as a Government of India approved Travel Agent. Though obtaining this registration is not mandatory, it is beneficial as it provides recognition to travel agents in India. The Ministry of Tourism started a scheme known as ‘Recognition of Tourism Service Providers by the Ministry of Tourism’ to promote the tourism sector in India.
This scheme allows travel agencies, tour operators, and travel agents to operate their business and encourages standard, service and quality in their business. The travel agents or agencies should apply to the Ministry of Tourism to be registered as recognised travel agents.
However, a travel agent should satisfy specific requirements of annual turnover, capital invested, qualification requirements for staff employed, a minimum period of operational experience, maintenance of minimum office space and other stipulations as per the guidelines for the scheme to become a Government of India recognised travel agent.
IATA Agent
The International Air Transport Association (IATA) is responsible for the worldwide aviation travel industry, representing around 240 airlines or 84% of total air traffic. IATA offers professional development services and comprehensive training for travel agents. The IATA accreditation is a significant seal of approval recognised worldwide.
Thus, though becoming an IATA agent is not mandatory, it is recommended for a travel agency to obtain an IATA accreditation and enjoy access to a wide range of benefits. The IATA accreditation is vital for a travel firm providing international travel packages as it helps them simplify booking processes and conduct a hassle-free tour.
FAQs
Is it mandatory to obtain a travel agency license in India?
While it’s not mandatory, obtaining a travel agency license from the Ministry of Tourism (Govt. of India) can enhance your credibility and trustworthiness.
What is IATA accreditation, and is it necessary?
IATA (International Air Transport Association) accreditation allows you to book and sell international and domestic air tickets. It is not mandatory but can be beneficial for your business.
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