Unlocking Ayodhya’s economic potential: PM Modi’s grand vision

Prime Minister Narendra Modi’s much-anticipated inauguration of the Ram temple in Ayodhya on January 22nd not only signifies a major religious milestone but also unleashes a substantial economic impact. With a colossal $10 billion makeover featuring a new airport, revamped railway station, township, and improved road connectivity, Ayodhya is poised for a remarkable transformation. Envisaging over 50 million tourists annually, this initiative has the potential to set a template for infrastructural growth in India’s burgeoning tourism sector.

India’s tourism sector, a key contributor to GDP, is expected to reach $443 billion by FY33, growing at an 8% CAGR. Ayodhya’s makeover, backed by an investment of $10 billion, positions it to become a global religious and spiritual tourist destination, benefiting various sectors, including hospitality.


Ram Mandir: The spiritual beacon

The spiritual centerpiece, Ram Mandir, is an iconic structure built at an estimated cost of $225 million, funded through contributions and donations. This main pilgrimage site spans nearly 70 acres and is designed to accommodate approximately one million devotees collectively. Forecasts indicate a surge in daily pilgrim numbers, reaching an anticipated 100,000-150,000 per day, making it a significant and bustling religious hub.

Transformative mega infrastructure projects

Ayodhya is witnessing transformative mega infrastructure projects, including a newly operational airport with Phase I costing $175 million, facilitating tourism, business, and employment. The revamped railway station, invested at $30 million in Phase I, now accommodates 60,000 passengers. Additionally, key road networks like Ram Path, Ram Janmabhoomi Path, and Bhakti Path have been refurbished, enhancing connectivity. A sprawling 1,200-acre greenfield township, at an estimated $260 million, is also unveiled, attracting senior citizens and families seeking a sacred second home. These initiatives promise to propel Ayodhya into a thriving and connected hub.

Surge in hospitality sector

Ayodhya’s hotel and hospitality sector are experiencing a significant surge with demand outstripping supply. With approximately 17 hotels and 590 rooms currently, the city anticipates a major expansion with 73 new hotels in the pipeline, 40 already under construction. Renowned chains like IHCL, Marriott International, Wyndham, and more are actively participating, with IHCL committing to two new properties operational by 2027. ITC Hotels is also exploring opportunities, and OYO plans to add 1000 hotel rooms in Ayodhya. The surge in tourism, driven by Ayodhya’s elevated religious and cultural status, is expected to benefit key players like IHCL, ITC Hotels, EIH Limited, and OYO Rooms.

Strategic opportunities in FMCG and QSR sector

Ayodhya’s FMCG and QSR sector are witnessing strategic opportunities with religious and pilgrimage sites becoming lucrative markets. Key players such as Restaurant Brands Asia (RBA), Devyani International, and Jubilant Foods are either in discussions or have already set up outlets. The anticipated surge in tourism and residents is expected to drive substantial demand for FMCG, consumer staples, and quick-service restaurants (QSR). Potential beneficiaries include Jubilant Foodworks, Britannia Industries, Godrej Consumer, ITC, Westlife Foodworld, Hindustan Unilever, Devyani International, and Sapphire Foods.

Aviation and railways sector on the rise

Ayodhya’s aviation and railways sector is experiencing a notable impact with key players making strategic moves. Indigo has designated Ayodhya as its 86th domestic destination, offering direct flights from Delhi, Ahmedabad, and Mumbai. Air India has also announced direct flights from Bengaluru, Kolkata, and Delhi, while SpiceJet and Akasa Air have introduced flights connecting Ayodhya to multiple cities. IRCTC has responded by unveiling tour packages to Ayodhya. The expected surge in tourism and residents is set to elevate the demand for both domestic and international connectivity, benefitting aviation, railways, and ancillary service providers. Potential beneficiaries include Inter Globe Aviation (Indigo), SpiceJet, Akasa Air, IRCTC, Make My Trip, and Ease My Trip.

Ayodhya: A spiritual hub with global recognition

As per CIA’s World Factbook 2022, Ayodhya stands out as a world religious site akin to Vatican City and Mecca. The estimated annual revenue is expected to surpass other religious sites. With an annual expected footfall of 50-100 million, Ayodhya’s significance is more than double that of the famous Tirupati Temple.

India: A Tourism Powerhouse

India, ranked 17th in international tourist arrivals in 2021, is set to further accelerate its market share. Cumulative FDI inflow in the tourism sector reached $7.5 billion in 2021 with a 5-year CAGR of approximately 20%. India’s rich geographical diversity, cultural heritage, and vibrant arts, music, and cuisine scenes make it a sought-after global tourist destination.

Statue of Unity: Greenfield Marvel

The Statue of Unity, announced in 2010 and inaugurated in 2018, stands as a testament to India’s commitment to monumental landmarks driving tourism and economic growth. Crafted by Larsen & Toubro (L&T) at a cost of $360 million, this colossal statue is a tribute to Vallabhbhai Patel, India’s first Home Minister. Soaring to a height of 182 meters, it holds the distinction of being the world’s tallest statue, catalyzing multiple attractions and transforming the local economy.

In conclusion, Ayodhya’s grand transformation and India’s commitment to tourism infrastructure present a remarkable opportunity for investors and businesses across various sectors. As the religious and cultural significance of Ayodhya gains global recognition, the economic impact is poised to be substantial, setting the stage for a new era in India’s tourism landscape.

Source: Jefferies, Equity Research, January 2024