An investigation of the demand pulled factors of foreign tourist inflows to India

Abstract

This study aims to examine the demand-driven factors that attract foreign tourists to India. This study used an advanced gravity model to examine the factors that drew demand from 15 major foreign tourist destination countries from 1995 to 2018. Descriptive statistics, correlation, OLS, and panel GMM are the statistical tools used in data analysis. The results indicate that the per capita income of India and the countries of origin, the size of the Indian population, and a favorable visa policy all contribute to attracting foreign tourists to India. Meanwhile, the high cost of living in India compared to foreign tourist countries, terrorist incidents, and long distances between India and these countries are some of the factors that discourage foreign tourists from visiting India. The results of the study are robust and compelling and have significant implications for policymakers and the industry. Based on the findings, the study suggests that the Indian government should reduce the cost of living, especially for foreign tourists, by exempting them from paying goods and services tax and other taxes at the departure airport by showing the bill. In addition, security is an issue where the government should ensure the safety of foreign tourists.