Hotels are also an extremely important component of the tourism industry. The Indian hospitality sector has been growing at a cumulative annual growth rate of 14 per cent every year.
The role of the Indian government, which has provided policy and infrastructural support, has been instrumental in the growth and development of the industry.The government has permitted 100% FDI in the sector under the automatic route, FDI into all construction and development projects including construction of hotels and resorts, recreational facilities, and city and regional-level infrastructure.
During the period April 2000-September 2015, the hotel and tourism sector attracted around US$ 8.48 billion of FDI, according to the data released by Department of Industrial Policy and Promotion (DIPP).
A five year tax holiday has been given to organizations that set up hotels, resorts and convention centers at specific destinations, subject to fulfillment with the agreed conditions. It is expected that the hospitality division is expected to see an additional US$11.41 billion in inbound investments over the next two years.