Bhutan’s Sustainable Development Fee has limited the entry of Indians into the country, for tourism. Travel companies have registered a decrease in footfall of up to 67 percent since the Himalayan country reopened its borders to tourists.
Bhutan’s ‘Sustainable Development Fee (SDF)’ was introduced in September 2022 for tourists across India, Maldives, and Bangladesh.
“Before the pandemic, there used to be 10 bookings per month, now we hardly get anything. Thing is, the travel prices are very high and volatile and now they have added taxes. Before the pandemic, the package cost for four people used to be around Rs. 2 lakhs, but now it has gone up to Rs. 3 lakhs. People call us every day, enquiring about the Bhutan trip but never visit. They often compare it to cheaper foreign destinations like Sri Lanka and Thailand,” said Rajesh, owner of AirOne Travel Solutions.
Another agency, IRI iFly Holidays, which is located in Vijayanagar, Bengaluru, said it has also seen a sharp fall in visitors to Bhutan due to the high costs involved.
Bhutan has always been traditionally expensive compared to other countries. But now with the added SDF, tourists have been refraining from visiting the country due to high costs. Before the pandemic, we used to get five or six bookings per month, but now it has decreased to one or just two,” said Ajit, partner at IRI iFly Holidays.
Impact of SDF
After following a strict ‘zero-Covid’ policy for two and a half years, Bhutan re-opened itself to the tourism industry in September 2022. But in order to sustain its environment-friendly tourism policy, the country announced a Rs. 1,200 per day fee for travelers from India, Bangladesh and Maldives.
While the fee of Rs. 1,200 was introduced for regional travelers (India, Maldives and Bangladesh), Bhutan raised its SDF for foreign travelers from $65 to $200, which amounts to a figure of Rs. 16,000 per day.
Dorji Dhradhul, Director General of the Tourism Council of Bhutan, told the New Indian that the SDF will go towards improving the infrastructure and services of the tourism industry in the country.
Bhutan’s reliance on India
Before the pandemic, Bhutan had averaged over two and a half lakh visitors each year since 2017. But the average number of visitors in the country took a rapid fall in the pandemic year of 2020 when the country only registered 29,812 visitors – a 90.55 percent fall.
Data from the Department of Tourism, Bhutan, suggests 22,298 of the visitors were Indian. The report adds that more than 71 percent of Indian travelers opt for a travel package through agencies – higher than Bangladesh and most South Asian countries.
Shubham Goel, a local Bengaluru resident passionate about monasteries said he was looking forward to a trip to Bhutan to complete a trek to Tiger Hill monastery. But due to SDF, his package estimates skyrocketed, ultimately causing him to cancel his trip.
“I had planned to go to Bhutan in the coming February. But the new tax launched by the Bhutan government means our group of four people will have to pay around Rs. 25,000 extra just to stay in the country for five days. So we had to cancel the trip,” Shubham said.
Affect on pan-Indian travel agencies
Because of the increased costs of a trip to Bhutan, travel agencies in other parts of the country are hit as well. Kaniska Sen, owner of Fly High Holidays, said two-thirds of the total footfall in his company for Bhutan tour packages have disappeared since the country reopened its borders.
“There used to be 45 people going to Bhutan monthly, but now it has decreased to three or four families, which is about 15 people. Although the tourism industry has taken off after the pandemic, people just do not want to visit Bhutan because of the high costs,” Kaniska added.
Rakesh Sharma, who runs RS Travels in Jaigaon, a town in West Bengal located just three kilometers away from the Bhutan border and its immigration office in Phuentsholing, said Indian tourists coming to Bhutan has hit a rock bottom and there has been a 90 percent decrease in the overall footfall in his company.
Measures aimed at gaining high value tourists
The tax is part of the Bhutan government’s ‘High Value – Low Volume’ policy that seeks to minimize the number of tourists and help the country retain its culture and promote the country as an exclusive tourist destination.
Tenzing Lamsang, the editor of the Bhutanese newspaper, The Bhutanese, said the SDF charged from the regional tourists is a move aimed at checking mass tourism, which was becoming a major issue in Bhutan.
“Bhutan was being sold as a destination cheaper than most mass tourism sites in India like Goa, Manali, Darjeeling etc. by some Indian tour operators,” he said in a tweet.
🧵— Tenzing Lamsang (@TenzingLamsang) September 25, 2022
The INR 1,200 per day SDF for Indian tourists is aimed at checking mass tourism which was becoming a major issue in Bhutan.
Bhutan was being sold as a destination cheaper than most mass tourism sites in India like Goa, Manali, Darjeeling etc by some Indian tour operators.
“The result was a mass inflow of tourists which Bhutan was unable to cope with. Greedy landlords were throwing out families in Thimphu and other places to convert apartments into hotels. Traffic jams got much worse. Trash was dumped by tourists everywhere including holy site,” he added.
Data from the State of the Nation (Bhutan) shows that the country has registered 21,409 tourists since reopening its borders on September 2022. Among them, 11,525 guests have paid the Rs. 1,200 per day regional SDF, while 6,108 foreign tourists have paid $200 per day.