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India's socioeconomic development, the creation of jobs, and the country's foreign exchange benefit significantly from tourism. Hence, tourism has a massive multiplier effect on the GDP of the country. The Government of India has launched several measures over the past few years to boost tourism in the nation. According to the Budget announcement for 2017–18, the Ministry of Tourism plans to create five Special Tourism Zones with world-class infrastructure around the nation for holistic tourism development.

What are Special Tourism Zones (STZs)?

STZs are envisioned as holistic communities with the world's best infrastructure built around strong tourist themes complemented by first-rate amenities to provide unique experiences. The proposed zones aim to establish tourism as a significant driver of economic growth. It seeks to maximise the local community's benefits while focusing on preserving natural resources for future generations. STZs will have a variety of tourist-friendly recreational, leisure, entertainment, educational, and cultural amenities. To provide visitors with a variety of experiences and encourage longer stays, the designated regions are proposed to contain at least three to four major tourism themes such as cultural, wildlife, heritage, adventure, coastal, etc.

Benefits of STZs

Tourism has a dynamic labour market, with high labour turnover among organisations and a diverse range of career options with decent wages. An increase in the number of inbound tourists benefits both the economy of the destination and generates employment opportunities.

One of the most labour-intensive components of the tourism industry is the Hospitality Service. It could potentially be the largest employer within an STZ. Enhancement of employment opportunities of the local community is one of the prime objectives for the development of these STZs.

  • The sector gives MSMEs the opportunity to launch their own companies and offers chances to create self-employment. Additionally, people not falling within the conventional employment category also get benefited from the tourism industry. This includes workers with minimal qualifications low-skilled labours, members of ethnic minority groups, immigrants, young people without jobs, and women who can work part-time. This paves the way for eradication of both poverty and unemployment, by enhancing the economic activities for the locals.
  • Construction of world-class infrastructure including new roads and highways, developed parks, improved public spaces, healthcare facilities, and new airports will make an STZ accessible to tourists. The development of STZs will improve the quality and standard of living of the locals living around the site as it aims to improve the overall infrastructure of a place leading to reliability and sustainability of the tourism product.
  • All the components of an STZ such as hotel accommodation, commercial and medical facilities, and tourism products (museums, theme parks etc) have the potential to generate revenue. Therefore, a financially viable STZ can be expected to generate a positive free cash flow during the operating period. It can be estimated that tourists visiting and staying in the STZ will generate significant revenue, leading to an increase in foreign exchange.
  • Tourism facilitates cultural exchange between visitors and locals thereby enriching the host country’s cultural diversity. Brownfield STZs can be potentially developed to utilize additional areas that are in close proximity to existing tourist destinations. In addition to incentivising local and ecosystem players, it will pay for the conservation of archaeological and historic sites.

Adverse Impact of STZs

One has to keep in mind that there are two sides to a coin. Hence, there are important considerations that can help regulate and manage any adverse impacts of the STZs.

  • Communities in coastal and hilly regions rely heavily on natural resources like coastlines and forests for livelihood. If a zone is constructed in such areas, it may lead to physical displacement of locals and also causing loss of access to natural resources which can affect the people dependent on those resources. However, The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement Act of 2013 shall serve as the foundation for the Resettlement and Rehabilitation (R&R) Plan for project-affected families in STZs. It will guarantee an adequate rehabilitation package and protection of the rights of marginal communities. The Act aims to provide a better standard of living and to make efforts to provide sustainable income to the affected families. The proposed STZ shall contribute to the creation of employment possibilities, and additional economic activity for the local community. It will also lead to livelihood enhancement in the region and help raise the standard of living of the local community.
  • There is a risk of damage environment from the creation of an STZ The democratic spaces available to communities under the Environmental Clearance Regulations to decide on tourism development or voice their consent or dissent to projects may not apply in the single window clearance approval mechanism.
  • In the current age of promoting sustainable and responsible tourism, it is of utmost importance to ensure the development of STZ happens in a holistic manner keeping the principles of sustainability in mind. The use of renewable energy, eco-friendly material, e-vehicles, optimizing resource efficiencies, and other similar measures should be encouraged. Special incentives may be given to encourage green investments and intends to integrate open and green places in STZs. Through these sections, environmental consequences can be decreased.


The benefits of STZs for the Indian economy are numerous which include FDI inflow, employment generation, infrastructure growth and a boost to the service & industrial sectors. However, there is a need to prepare a roadmap to mitigate any adverse impact of STZ on tribals and other settlements living in affected areas. In the long run, STZ can have a positive impact on people living in the region courtesy the following reasons:

Firstly, developing STZ will increase employment opportunities and generate livelihood for the local community and tribals. They will no longer be solely reliant on natural resources and will be able to make use of all the other opportunities and resources available which will raise their standard of living. One of the guiding principles of STZ should be creation of conditions for environmental protection and socio-economic development of the region through integrated tourism development. This can ensure enhancement of the region and overall development of the economy and the local community.

Secondly, STZ is proposed to be based on strong themes including tribal and coastal themes. Tourism in tribal areas can have a significant positive impact if done sensitively and responsibly. It will lead to the creation of financial opportunities for locals and help create awareness about indigenous people.

STZ has the potential to fuel India's development and economy and can lead to tourism becoming an engine of economic growth. The sector has undergone remarkable advancements in recent years including being accorded an industry status in some states like Rajasthan, Gujarat, etc. Given the incredible growth potential of tourism sector, it is crucial that the development of unique regions like special tourism zones leads the next stage of growth.

This blog has been co-authored by Sara Nasreen. 

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