Small Cities Drive India's Forex Boom, Reshaping Global Travel
Overview
India's overseas travel is shifting from metros to Tier 2 and Tier 3 cities, fueled by post-Covid wealth creation and improved air connectivity. Asset appreciation is making international trips a practical choice for residents of cities like Indore and Jaipur, significantly boosting forex demand and redefining India's global travel footprint beyond traditional hubs.
Smaller Cities Power India's Overseas Travel Surge
India's international travel landscape is undergoing a profound transformation, with growth increasingly originating from Tier 2 and Tier 3 cities rather than solely from its metropolitan hubs. This seismic shift is reshaping the nation's foreign exchange (forex) demand and global travel footprint, moving beyond historical trends to establish a new paradigm.
Drivers of the Non-Metro Boom
Post-Covid wealth creation has emerged as a primary catalyst, particularly through sharp appreciations in land and real estate values in smaller cities. This has unlocked significant liquidity for entrepreneurs, traders, and landowners, shifting international travel from an aspiration to a tangible possibility. Manoj Dhanotiya, Founder and CEO of MicroMitti, notes that "International travel in Tier 2 India is no longer salary driven, it is asset driven."
Enhanced Connectivity Fuels Demand
The expansion of direct international flights from regional airports has been a critical enabler. Routes from cities like Indore to Dubai have dramatically reduced logistical and psychological barriers, proving more effective in stimulating demand than prolonged marketing efforts. Pavan Kavad, Managing Director of Prithvi Exchange, concurs, highlighting rising disposable incomes and better regional air connectivity as key factors making overseas trips more accessible.
Shifting Destinations and Spending Habits
Destinations like Dubai have become the first international port of call for a wider segment of the Indian population. Thailand, Vietnam, the Middle East, and budget European locales are also popular due to easier visa processes and competitive pricing. Contrary to assumptions, travelers from smaller cities are value-conscious but significant spenders, often opting for longer family trips, optimizing accommodations, and investing confidently in shopping and experiences.
Multi-Generational Travel and Future Needs
The trend now encompasses multiple generations, driven by purposes beyond leisure, including medical tourism, business exposure, and visiting relatives. While overseas education intent remains high, actual student movement has seen moderation due to stricter visa regimes. Tuition fees and living expenses represent substantial forex outflows. Experts emphasize the need for continued policy support, including expanded direct flight connectivity, streamlined visa processing, and improved Liberalised Remittance Scheme (LRS) procedures to sustain this momentum.
