What governments should do to enable MSMEs in tourism to thrive by 2023


Anwar Shirpurwala

Ease of doing business for small, medium and micro enterprises: We all know that tourism is vital to India’s economic growth and development, what’s more the country has huge potential in this sector and has something to offer everyone. India’s tourism market is estimated at US$75 billion in FY2020, with the overall contribution of tourism to the country’s GDP at around 5.8%. The Ministry of Tourism has been actively supporting the industry in rebuilding India’s tourism industry to be more inclusive, resilient and sustainable post-COVID-19.

Not to be outdone, the state governments launched new tourism policies according to industry conditions, promoted niche tourism products, and played their role through innovative policy formulation. For states to show eagerness and competitiveness by enacting attractive policies to attract more investment will bode well for India’s overall tourism industry.

However, given India’s size and diversity, we have yet to realize our true potential in tourism. Even though we have 40 UNESCO World Heritage Sites, we still can’t get the number of international tourists that smaller countries like Hong Kong, Dubai and Vietnam need.

Also read: CHATT sets up secretariat to strengthen MSMEs in tourism and hospitality

Since the pandemic began, alternative destinations have become the top choice of even domestic travelers to avoid crowded places. However, due to factors such as lack of infrastructure, low digital penetration and poor marketing capabilities of small businesses such as homestays, BnBs, individual hotel owners and micro-entrepreneurs who mainly operate in these places, cannot market themselves as tourist numbers remain low of.

Unavailability of resources, crunch of cash and poor infrastructure are other major barriers to the growth of these businesses, who fear compliance due to lack of knowledge about policy aspects, government schemes, taxes, etc. It is important to bring them into the formal sector to help them navigate these problems. To this end, it is imperative to develop online tools and digital platforms to collate and disseminate information on the key compliance, policy instruments, programs and benefits available after formalization.

Although there are various government policies and programs to address the issues facing the industry, the implementation of these policies and programs is not satisfactory. This requires a systematic approach to develop tourism by integrating resources and stakeholders to develop various plans and programs i.e. regional level tourism development with the participation of local industry representatives, influencers, youth and NGOs ; cluster development programs to provide shared facilities for micro and small enterprises; development of programs and projects to raise awareness of policies and implement regulations related to waste management.

Also read: Govt needs to develop district-level strategy for hospitality, tourism MSMEs: CHATT

Building a robust infrastructure, proper management, information sharing and developing new tourist attractions are some of the ways to address the challenges of overtourism during the holiday season. Additionally, partnerships that expose small businesses to new technologies, adopt global best technology practices and create opportunities for companies to develop hospitality, travel and tourism industry-specific technology solutions will go a long way in supporting hospitality and tourism SMEs .

This is in line with the five broad mandates under the proposed new National Tourism Policy focusing on green tourism, digital tourism, skills training, destination management organizations and MSMEs, especially for hospitality, tourism and travel SMEs, Transitioning from the informal to the formal sector is a very long process that requires strategic action plans to implement and monitor government policies.

The Indian presidency of G20 offers a great opportunity for India to showcase our rich biodiversity, cultural diversity, heritage and vast tourism offerings to travel enthusiasts around the world. As part of the country’s 2023 G20 presidency, the Indian government has made a conscious decision to plan around 200 meetings at 55 locations outside the metropolis, which will give every state and territory the opportunity to be represented. Thousands of delegates are expected to attend these conferences, which will naturally create a huge boost for the hospitality, tourism and travel industry, especially in lesser-known destinations.

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All in all, the pick-up in domestic tourist traffic and the G20 presidency will continue to boost travel and tourism, and India will be able to maintain this momentum in the new year. With both government and industry recognizing the importance and contribution of small businesses to the tourism industry, we expect widespread adoption of technology by 2023 and the introduction of policies and programs that favor MSMEs, which will strengthen the sector and help make its operations more efficient .

Anwar Shirpurwala is the Secretary-General of the Confederation of Hospitality, Technology and Tourism (CHATT). The views expressed are the author’s own.


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