India's tourism sector, which showed promising signs of recovery after the pandemic, is facing a stubborn slowdown. The momentum for foreign tourist arrivals (FTAs) has faltered, failing to reach pre-Covid levels and raising concerns about the country's competitiveness on the global travel map.
A Concerning Downturn in Foreign Tourist Numbers
The data reveals a clear setback. For the first nine months of this year, foreign tourist arrivals fell by 12% year-on-year, reaching just 6.18 million. Projections for the full year now estimate a total of around 8.7 to 8.8 million visitors. This figure stands in stark contrast to the 10.9 million FTAs recorded in 2019, highlighting a significant and persistent gap.
The challenges are not novel but remain unresolved. India continues to be perceived as a relatively expensive destination, and persistent infrastructure gaps combined with ongoing safety concerns affect traveler decisions. This year, additional shocks exacerbated the situation. Political instability in Bangladesh, historically a major source market for India, led to a sharp reduction in arrivals from there. Furthermore, a terrorist attack in Pahalgam, Jammu & Kashmir, dented confidence, and widespread flight cancellations by IndiGo during the peak December travel season added to the industry's woes.
Structural Weaknesses and Policy Paralysis
The slowdown appears more acute when compared to the robust recovery seen in Southeast Asia. Cheaper and more accessible destinations in the region are experiencing a surge in international tourists, while India struggles to keep pace.
A deeper structural issue is the lack of market diversification. Nearly 45% of India's foreign tourists originate from just three countries: the United States, Bangladesh, and the United Kingdom. This over-reliance means any disruption in one of these key markets has an immediate and visible impact on overall numbers.
Perhaps the most telling indicator of the sector's challenges is policy follow-through. Despite intense global competition, the tourism ministry has consistently underspent its allocated budget, utilizing only about one-third of its funds in recent years. Crucially, budgets for overseas promotion have been slashed dramatically—to a mere ₹3 crore this year from ₹300-450 crore before the pandemic—severely limiting India's ability to market itself abroad.
Other Key Developments from Mint's Reporting
MGNREGA Overhaul: The government has taken a significant step by passing the Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission (Gramin) Bill, 2025, in the Lok Sabha. This legislation aims to replace the two-decade-old MGNREGA, arguing that rural India has transformed. The new bill promises 125 days of work, digital monitoring, and durable asset creation. However, it shifts the funding model, with states now required to contribute a larger share, leading to concerns that the demand-driven right may become a budget-capped scheme.
Rupee Under Pressure: The Indian rupee tested new lows, briefly slipping past 91 against the US dollar before RBI intervention stabilized it. The pressure stems not from the current account but from capital outflows and muted foreign direct investment (FDI). A revival in long-term foreign investments and clarity on a US-India trade deal are seen as potential stabilizers.
RBI Cautions on Stablecoins: The Reserve Bank of India has expressed strong reservations about privately issued stablecoins. Deputy Governor T. Rabi Sankar warned that these digital tokens pose risks to monetary policy and financial stability, questioning their status as 'money' without sovereign backing. The central bank is instead advocating for its own digital rupee (CBDC) as a safer, regulated alternative.
Securities Law Revamp: In a major regulatory cleanup, Finance Minister Nirmala Sitharaman has tabled the Securities Markets Code, 2025. This new code consolidates three legacy laws into a single framework aimed at enhancing regulatory clarity, accountability, and faster investor grievance redressal.
Major Financial Sector Bet: In a landmark deal signaling confidence in India's financial future, Japan's MUFG will invest ₹39,618 crore for a 20% stake in Shriram Finance. This marks one of the largest cross-border transactions this year and provides Shriram with significant capital to strengthen its balance sheet and expand in the MSME and retail lending spaces.
