Bhutan Offers Duty-Free Gold to Offset Tourism Fee Impact

Setting a new “gold standard” for travel, Bhutan is now offering duty-free gold to visitors, who may have been discouraged to visit the destination due to the high sustainable tourism fee.

However, certain terms and conditions must be met before travelers can avail the gold at duty-free rate, which is approximately $529 for 10 grams of 24 karat gold.

All tourists who pay the sustainable development fee can buy the duty-free gold, said Karma Lotey, CEO of Yangphel Adventure Travel, a travel company based in Bhutan.

“Guests would have to spend at least one night in a certified hotel to avail the special duty-free pricing and would need to pay for the gold in U.S. dollars,” noted Lotey. .

The move, according to many, is specially directed towards Indian tourists, who till 2020 had been granted free entry into Bhutan and are now required to shell out $15 per day, per person as sustainable development fee.

“Since the introduction of the sustainable development fee for Indians, we have seen a drop of around 50 percent of tourists from India compared to pre-pandemic levels,” said Lotey.

Over 73 percent of total arrivals to Bhutan in 2019 were from India. Of the 315,599 inbound arrivals to Bhutan, 230,381 were from India.

Since Bhutan’s reopening post Covid, between September-December 2022, 16,520 tourists have visited the country, of which 8,273 were Indian tourists.

“The main objective of the scheme is to provide additional value to guests visiting Bhutan,” Lotey said.

And the “additional value” for Indian guests in this case would be around $200 as 10 grams of 24 karat gold costs approximately $727 in India.

That’s why many feel this is Bhutan’s way of sweetening the deal for Indian tourists — its biggest source market.

Sustainable Development Fee for Indians            

When Bhutan opened its borders last year in September, the country hiked its sustainable development fee for foreign travelers from $65 to $200 per person, per night.

Indian tourists, who were exempted to pay the sustainable development fee till 2020, were asked to pay $15 per day, per person.

Travel agents have observed that the implementation of a sustainable development fee in Bhutan has dissuaded cost-conscious Indian tourists from traveling to the country.

To provide context, for a four-night stay in Bhutan, a family of four from India would be required to pay $240 as sustainable development fee, which is almost 40 percent of the total tour cost, excluding airfare.

“The introduction of the new fee had a significant impact on tourism to Bhutan from India, particularly among the mass market, who found it an expensive proposition to pay $15 per person per night,” said Debjit Dutta, director and CEO of Impression Tourism Services, an India-based responsible destination marketing company.

With 10 grams of 24 karat gold almost $200 cheaper in Bhutan, Indians who can afford to pay for it might find it lucrative to visit Bhutan, said Dutta.

Indians Love Their Bling

An integral part of Indian traditions and rituals, gold doesn’t just have a long-standing cultural and religious significance, it is also seen as a safe and reliable investment option.

India was the largest consumer of gold before being overtaken by China in 2009. In 2021, India bought 611 tonnes of gold jewelery, second only to China (673 tonnes), according to the World Gold Council.

Gold jewellery exports in India have grown from $7.6 billion in 2015 to $12.4 billion in 2019.

Male passengers in India are exempted to pay customs duty on gold jewellery with an aggregate weight of upto 20 grams and a maximum monetary value of $605, while the exemption for female passengers is 40 grams and a maximum monetary value of $1210.

While Lotey said it may be too early to comment on the demand following the introduction of the scheme, he noted a significant interest from both Indian and other international tourists.

“There is a lot of buzz and excitement in the market about it,” observed Lotey.

However, Lotey noted that the number of Indian tourists is picking up every month, and the present inflow of tourists is better than the initial forecast.

Bhutan’s High Value, Low Volume Mantra

Although some may view the sustainable development fee as a disincentive, Dutta said its implementation did not come as a surprise as Bhutan has always prioritized quality over quantity by limiting tourism in the past.

The Covid-19 pandemic provided Bhutan with an opportunity to reevaluate its approach towards its “high value, low volume” tourism policy.

“Bhutan’s strategic policy aims to ensure sustainable tourism practices while addressing concerns about the destination’s carrying capacity,” Dutta said and considers Bhutan an excellent model for other destinations looking to develop a sustainable and responsible tourism industry.

However, some also argue that the previous behavior of some Indian tourists played a role in the need for the fee.

Earlier, when there was no tourism fee, tourists would arrive via Phuentsholing, treat the destination as a picnic spot, and leave after a day or two, according to Dipankar Sarkar, the general manager of Travel and Living, a travel company based in India’s Jaigaon that shares a border with Bhutan.

Sarkar stated that visitors who now pay the sustainable development fee are more serious about exploring Bhutan and recognize their responsibility towards the destination.

Bhutan is also attempting to balance the tourism fee with incentives like lowering the entrance charge for many tourism destinations.

Lotey noted that India has always been Bhutan’s top source market for tourism, and it remains an incredibly crucial market.

“The Department of Tourism and relevant private tourism players have marketing and sales strategies in place to attract Indian travelers to Bhutan this year,” Lotey informed.