Tourism Industry in India Research Paper Example | Topics and Well Written Essays - 2000 words

Tourism Industry in India - Research Paper Example Segments such as hotels, tour operators, airlines, shipping etc., are significant contributors to this revenue. With lot of imagination and ideas the Indian tourism sector is gathering momentum and is set to have not only large numbers of foreign tourists but also make a big share in the country's Gross Domestic Product (GDP). Theodore Koumelis, in his article on Indian tourism and recent statistics, suggests that the performance of the Indian tourism industry has been very encouraging and has registered an 11% increase in foreign tourist arrivals during 2006. According to Starbucks annual CSR of 2006, Starbucks had then planned to enter the Indian market through a joint venture with an Indian partner RPG Enterprises so as to expand its business. Although many foreign companies see huge potential in Indian market due to huge middle class population, entering into it may not be that lucrative at time due to strict governmental economic policies. Therefore, certain country risks are involved. Almost entire South Asian region has faced severe political instability crisis for many decades with variable consequences. India, by far has been an example not only for South Asian countries but for many developed nations as well. Known as the largest democracy in the world, India has enjoyed continuous trends in its political and economical policies while directly resulting in greater political stability. Thus, tourism and hospitality industry in India has greatly benefited. However, greater stability of such magnitude has resulted in slower shifts and transitions in policy making processes, while negatively affecting the emergence of Indian tourism market for becoming a regional market. Perhaps, this has been the reason why multinational companies did not want to come to India in the earlier stages. Although there is opportunity for domestic and foreign business to grow, there are certain obstacles to these expansions. One of the major obstacles is the entry barriers abound and restrictions imposed on foreign direct investments. The government currently permits on an automatic basis with the exception that they do not already have an existing venture in India in the same field and proposals that may fall outside notified sectional policy/caps. The risk for these new businesses is that regulations are poorly enforced and the restrictions imposed on each zoning and tenancy laws make property ownership among the most expensive in the world. Therefore, the government has ownership of most of the businesses and this lowers the economic growth, making it expensive for other businesses to gain ownership. For Starbucks in India, political and legal risks can include threats to the profitability. These threats derive from the government action or inaction by economic conditions in the marketplace. The threats are included in the action or inaction by political authorities or their agents, rather than changes in supply and demand of goods and services. Therefore, Starbucks is required to open a bank account with an authorized dealer for designated foreign currency. A Foreign Currency Non-Resident (FCNR) account is to be established while converting the foreign exchange to Indian Rupees (Indian Liaison, 2007). India has a tax structure that is well developed to levy taxes divided between