Indian Travelers Hit New Spending Peak: How Much They Spent Overseas

23.05.2024 - 16:41 / skift.com / Peden Doma Bhutia

Indian travelers have reached a new peak in overseas spending.

According to data from India’s central bank, Indians spent $31.7 billion overseas under the Liberalised Remittance Scheme (LRS), in fiscal 2024 according to a Times of India report.

And more than half of that – 54% – was on international travel: $17 billion. That’s a 25% increase from the previous year.

This resurgence comes after a sharp decline in 2021, when international travel spending plummeted to $3.2 billion for Indians due to the pandemic.

The introduction of the Tax Collected at Source (TCS) in October 2023 has impacted the monthly average spending. Before the TCS implementation, the average monthly spend was $1.5 billion, which decreased to $1.3 billion between October 2023 and March 2024.

Under the new TCS rules, overseas tour packages up to INR 700,000 ($8,384) incur a 5% tax. Above that and the tax goes to 20%.

MakeMyTrip Co-Founder and Group CEO, Rajesh Magow, earlier told Skift that while it was initially confusing, travelers are now getting accustomed to the INR 700,000 limit.

An earlier joint report by Booking.com and McKinsey had projected that Indians could become the fourth-largest global travel spenders by 2030.

It projected that travel spending for Indians would rise from $150 billion in 2019 to $410 billion by 2030. While outbound trips currently account for only 1% of total trips, they contribute to 25% of total expenditure, a figure anticipated to grow to 35% in the next decade.

American Express Travel’s global travel trends report also indicates that Indians plan to increase their travel spending.

The first quarter of 2024 alone saw 97 million passengers traveling through Indian airports for both international and domestic trips, Mastercard Economics Institute noted in its latest report. It’s a stark contrast to a decade ago when such figures would take a year to achieve.

A growing number of Indian travelers with improving incomes bodes well for the travel industry.

The Mastercard report projects that India will add over 20 million middle-class individuals (earning more than $15,000 annually) and nearly 2 million high-income earners (earning more than $80,000 annually) over the next five years.

This year’s Skift Megatrends highlighted India’s middle class, which makes up 31% of India’s population, a figure expected to rise to 38% by 2031 and 60% by 2047. And 65% of India’s population is under 35 years old.

By the middle of this century, India is expected to boast a middle-class population of around 1 billion.

Indian travel trends also show growth in international destinations.

As of March 2024, Indian passenger arrivals into the U.S. were 59% above 2019 levels, outperforming the overall recovery of overseas