Tuesday, April 26, 2011

Budget foreign travel - tips for layman

Foreign Destinations At Indian Prices 2010

In the last few years that have elapsed a lot has changed with the world. Some of those trends started even earlier than that, but have gained further traction now and are particularly important for the Indian traveller. The Indian rupee has been appreciating against the US dollar, the euro and the pound sterling, as well as a host of other First World currencies.

As in earlier editions of this exercise, we have included only those countries that are not more than twice as expensive as India. So, if, say, you pay Rs 30 for a coffee here, you will not pay more than Rs 60 in the country you are vacationing in. Everything is not comparable though.

In Europe, for instance, bottled water—the Evians and Perriers of the world—cost a bomb; in some places, about the same as a bottle of beer or wine. But you do not need bottled water since the stuff flowing out of taps is good for drinking, at least in most cities. Thus, to even things out, for our exercise, we have looked at indices based on a basket of goods.

This time around, we have been a bit more choosy, and somewhat less adventurous, in our selection. Broadly, we have tried to draw up the list such that for two people travelling together for 12 days or so, the total expense would work out to Rs 1.5 lakh-2 lakh, and that is without slumming it and trying to save on hotel bills money by taking overnight trains and living in dormitories. The indicative hotel rates we have given are for midrange hotels, in the capital cities of their respective countries, where it is usually among the, if not the highest, for that country.

This time around, we have left all of Central and South America out of the reckoning. The minimum return airfare that we had been able to find for that region was working out to over Rs 80,000 for an adult. That was not leaving enough for the rest of the trip. That’s a pity actually.

In the two earlier editions the countries that made the cut were Mexico, Chile, Brazil, Uruguay, Argentina, Costa Rica and Cuba. This year, if we did not consider airfare, in addition to the countries mentioned earlier, Colombia, Peru, Bolivia and Venezuela would have come up as countries that were not more than twice as expensive as India. Brazil would have gone out with a cost multiple of 2.30 times. Of course, we could probably have had to leave Mexico, because of the recent drug-related killings there. This time around Uruguay has remained about as expensive as last time with costs at 2.03 times that in India. The multiple of Indian cost for the other countries are: Chile 1.89, Mexico 1.76, Colombia 1.72; Peru 1.61, Paraguay 1.29, Argentina 1.01, Bolivia 0.96, and Venezuela 0.83. The countries that would have remained from last time would have cost less in general.

There have been two other omissions this time. First is the data on the cost of food. There are two reasons for this. The price of food is generally not out of whack with the cost of lodging. If lodging is expensive in a place, the food will be dear too, and vice versa.

Also, as a rule of thumb, you can take the cost of a mid-level meal at anything between 10 per cent and 15 per cent the price of a hotel of the same standard. For instance, if a mid-range hotel costs $50 a night, a restaurant of similar quality will give you a meal at $5-7. The other reason is that food is also a matter of personal taste. If you can eat what the locals do, it will be cheap.

The second is the places to see. The information provided here is only indicative of how much you are likely to spend on a holiday and, at best, a starting point for the search.

We have listed 30 countries here that could be worth considering. These are safe, worth visiting and affordable by foreign travel standards. For any single year, that keeps the choice fairly wide. Which is why we have left out the dodgy countries. Thailand, for instance, is going through a period of unrest. So while it has almost become as common as Goa as a destination for Indians, we have left it out of the listings.

The same holds true for Greece, which would have joined the countries in Europe as a great destination had it not been for the uncertainty being created over widespread strikes that are happening there. There is really no point in landing up somewhere only to have your holiday spoilt by unrest when you can actually anticipate the problem. So, rather than include countries along with warnings, we have simply taken them out of our listings altogether.

It is time now for a bit on the countries that are in the lists. These meet our criteria: not more than twice as expensive as India, safe at least till you decide to test your luck, and worth visiting for the sights, sounds and experiences they offer.

They are in Asia, Europe and Africa. Return airfares to most of them should work out to Rs 30,000, give or take a bit, for an adult flying economy class from New Delhi. Also, you do not need to spend a whole lot of time flying to these countries and using up precious holiday days.


The usual suspects are all there. They range from neighbours Nepal, Bhutan and Sri Lanka, to Cambodia, Vietnam and Laos in the east and Syria, Lebanon and Jordan in the west. Lebanon, a very picturesque country, makes its entry into our list for the first time this year.

There are two other two countries that have entered the list this time. They are Macau, which seems to have positioned itself as the casino capital of Asia.

Sri Lanka, which we had omitted last time because of the Tamil unrest, is peaceful now and makes an entry as an inexpensive option near home.

Indonesia, which got eliminated last time because of unrest related to East Timor, comes back into the reckoning as the problem has subsided.

Meanwhile, Iran exits the list because planning ahead in a scenario that is somewhat more volatile than in the past is a problem. You never know when you might have to change your plan. And why bother when you are not short of options.

















Most of the highly aspirational destinations for Indians are in this region. Problem is, being the most developed cluster of countries in the world, it is also the most expensive. Most of the countries that are in our list are in eastern Europe, which is still recovering from a good 40 years or so behind the Iron Curtain.

Their westerly counterparts are way too expensive. But that said, this area is not short on interesting places at all. In fact, apart from the cathedrals and castles that dot the area, it is emerging as one of the hardest partying places on the planet and the nightlife is good and not way too expensive. This edition of the listings sees new entrants Poland, and the Mediterranean islands of Cyprus and Malta. While the first and the second are pretty hot tourist destinations, Malta is a bit over the hill. But it could be an interesting option if you are looking for a bit of quaintness and not too much of bustle. These two islands are also places where it is easy to get by if you can speak English, which may not suffice in the other countries.

The Czech and Slovak Republics drop out this time as they have become too expensive. Again, it makes sense to cover more than one country as most of them are small by Indian standards and travelling from one to the other is quick and easy.

Two countries that are not on our list but are worth mentioning in among this lot are Spain and Portugal. These have been the poorest of the western European countries for some time now and have been hit pretty hard by the last downturn. So, even though they are in the Eurozone, their economic conditions have pushed prices down, creating an opportunity for us Indians, more so with the euro exchanging for about Rs 60. Even better, it is possible to cover the two countries in one go. So, how cheap is it really now? The biggest cost, hotels, in central Madrid are going for about $70 a night. In central Lisbon they are marginally cheaper. Other things too, are commensurately cheap. Beer costs about one euro and a snack two. Return airfare to Madrid from Delhi is about Rs 27,000 in early June. Think about it.












We have deliberately kept the list really short this time.

And very, very conventional except for Tunisia and Morocco. They are slightly expensive to reach but will be worth the money. We kept out the places which will be worth the money, but might cause some heartburn at the planning stage. Besides, the level of tourism infrastructure, and ease of communication were also considered. The other reason of course is that anything too far away from the sea could be unbearably hot. And if you plan a trip, don’t forget to include the cost of sun-screen. we take a look at vacations that really do the job of rejuvenating your mind and body.







Q How much money can I carry?

The maximum amount of foreign exchange that you can buy for your leisure/tourism purposes abroad for one or more trips is $10,000, or its equivalent, in one calendar year. The Travellers are allowed to purchase foreign currency notes / coins only up to US$ 3000.

Q For overseas travel, are credit or debit cards better or traveller's cheques (TCs)?

While foreign exchange and TCs are commonly used, they aren't the best modes of payment.

A. Travel Cards

Travel cards are a better option as they are hassle-free and convenient to use. For travel cards, a one-time card activation charge may be levied. The joining fee is usually Rs 125-165 and reload fee is Rs 60-115. Loading and redemption happen at the buy and sell exchange rates, respectively, on the day of the transaction. Apart from that you have to pay Exchange rate and small service fee for every transaction.

Travel cards come in handy if you want to make your trip hassle-free and convenient as far as managing money is concerned. These cards can be used abroad to withdraw cash in the local currency from over 1 million VISA ATMs. E.g. In Malaysia you can withdraw Malaysian Ringgit from ATM .These are valid at over 14 million merchant establishments accepting VISA Flag Cards. Locate a VISA ATM across the world at http://visa.via.infonow.net/locator/eur/jsp/SearchPage.jsp.

Scope. Some of the leading financial institutions that provide travel cards are HDFC Bank/ICICI Bank/ State Bank of India). The cards are valid for 8 currencies: US dollar, euro, pound sterling, Swiss francs, Australian dollar, Canadian dollar ,Singaporean and Japanese yen (the list varies across institutions).

An exchange rate is applied if the Travel card is used for any currency other than the base currency (with which the card is loaded .e.g. Rupee in case loaded in India). However if you can take the foreign currency of the concerned country then you will be saved from conversion rate.

Benefits. These cards also give insurance benefits (varying across institutions). The covers range from personal accident, missing of connecting international flight during transit and loss of travel documents, to hijacking and delay in flight due to delay in receipt of checked baggage. The policy gets activated once you buy the card. The claim, however, is applicable only if the travel card is active on the accident date and has some balance left. The costs vary across institutions (see chart below)

Most people fell back on good old travellers' cheques, although they weren't always convenient: time was lost in tracking down moneychangers, and money was lost in commissions. Also there could be times -- late at night, for example -- when you need money and no moneychanger's office is open.

B. Traveller's cheques:

This 107-year-old traveller's companion was mothered by American Express in 1891. In India, traveller's cheques (TCs) were introduced 75 years ago, and have been the overwhelming favourite of cash-shy travellers. You can buy traveller's cheques in your hometown before setting off. The issuing bank will require you to sign the cheque before giving it to you. On reaching your destination, the cheque can be cashed at any bank, or travel desks at hotels/airports.e.g.

· AmEx offers travellers a choice of 10 currencies. It charges a commission of 1 per cent on the issue of traveller's cheques and provides refund assistance within 48 hours of a loss being reported.

· Thomas Cook charges a commission of 1 per cent on issue of traveller's cheques.

Exceeding your entitlement. You can use cards and travellers' cheques in any combination, so long as you don't exceed your entitlement. If you do need to exceed your limit, you can request special permission from the RBI. This should be done a month before you leave the country, to allow for processing time. Under no circumstances can you exceed the limit while you are abroad; that would make you liable under the Foreign Exchange Regulation Act. In any case, you need to convince the RBI that you have genuine business-related, medical or other grounds to exceed your limit. The RBI does not generally extend the limit for tourists

C. International credit cards

For long, international credit cards were only for the corporate traveller. But now, the Hongkong Bank Thomas Cook card and the Bank of Baroda Global card etc. can be used by both business and non-business travellers. International credit cards make sense only if you travel frequently. Getting a card for a single trip is hardly worth the expense -- the annual fee is $40-100.Remember that on personal trips abroad, you cannot use a corporate credit card, even if you possess one.

More than credit: Most credit cards also allow you access to ATMs. For instance, the Hongkong Bank Thomas Cook card allows you to withdraw cash from MasterCard member banks and some Hongkong Bank branches. While abroad, you can use the card for anything, from paying hotel bills to a whim at the mall.

How to pay. After you're back home, you will receive your credit card bill. A dollar draft is the only way to pay it. When the bill arrives, buy a dollar draft for the bill amount from your authorised forex dealer. You will have to fill out a post-trip declaration and submit it to the dealer. The post-trip declaration details all the foreign exchange you took along -- travellers' cheques, cash and, of course, credit card -- besides how much you spent, and how much is left. In short, the declaration seeks to establish that you have not exceeded your entitlement.

RBI regulations require that all transactions relating to the credit card be settled through the authorised dealer who issued your credit card. You will have to send the dealer your credit card bill, post-trip declaration and a rupee cheque, at the prevailing exchange rate. You will also have to complete Form A2, which the RBI requires, before you can get a foreign exchange draft. Your dealer may charge a service fee to issue a dollar draft. Ensure that all forex transactions are endorsed on your passport.

D ATM cards

Visa Travel Money (VTM) from Thomas Cook is the only ATM card currently available to Indians. This is a prepaid debit card that only lets you draw money from ATMs; hotels and stores do not accept it. A VTM card lets you access Visa ATMs in the US and Europe. Tourists can buy a card for any amount between $250 and $3,000. The upper limit for business travellers stretches to $15,000.

Though the amount is defined in US currency, money can be withdrawn in local currency in any of the listed countries. The card can be bought at the prevailing dollar exchange rate, at no additional cost. And no, it's not free: there is a fixed fee of $1 for every ATM transaction.

E Foreign exchange, or forex

Foreign exchange, or forex, is available from banks, authorised dealers,moneychangers. The rates are determined by market forces and vary across dealers. These are quoted based on the prevailing inter-bank rates (IBR). “Normally, the rate at which you would buy forex would be marginally more than the IBR rate,” says Madhavan Menon, Managing director, Thomas Cook India. But you don’t have to pay a service fee when you buy forex. Says Kanwar Vivek, general manager, ICICI Bank.

According to me there nothing like hard currency, more so, if you are going to places like Indonesia, Cambodia.

The paperwork. Buying forex also involves a bit of paperwork. You will need to furnish a copy of your passport, visa,PAN ( or Form 60.and confirmed tickets. You also need to fill up Form A2 (stating the purpose of visit) and Basic Travel Quota (BTQ) Form, where you need to declare that you haven’t exceeded the limit of $10,000, or its equivalent, in a calendar year. (To download click)


or rbidocs.rbi.org.in/rdocs/forms/docs/fema-f2.doc

Q Selling at what rate?

While selling forex, the rate offered is slightly lower than the prevailing inter-bank rates(IBR).. Says Thomas Cook’s Menon: “Authorised dealers are free to charge a service fee. However, due to competition most don’t charge any. This depends on the dealer as well as the area (tourist spots). Airports always attract service charges.”

However, the Ministry of Finance circular, dated 12 March 2007, states that service tax is not leviable on money changing as it does not fall under the category of foreign exchange broking. The RBI, meanwhile, is silent on this issue of levying service charges, and simply asks dealers to be transparent and reasonable.

In a recent incident, a customer encashed foreign exchange with Thomas Cook at Indira Gandhi Inter-national Airport, New Delhi, and was charged Rs 165 as encashment fees while exchanging 2,590 Thai Bhat. Thomas Cook officials were not available for comments despite repeated attempts.

ICICI Bank’s Vivek, meanwhile, admits that authorised dealers do levy a fee. “Authorised dealers generally charge a margin (2-3 per cent) on the prevailing inter-bank rate, or on the cost at which they would sell the currency,” he says.

However, if you are using a travel card, you don’t need to go to any dealer at all. You just need to visit your bank. The refund on a travel cards is made at the prevailing market rate. There could be a delay of a week or so in refund, if there are some unsettled transactions.

Way out: go to your bank. You can approach your own bank to encash unsused forex. Most banks do not charge a fee.While authorised dealers may refuse to encash smaller denominations, banks do not have a problem doing so. The exchange value gets deposited in your account with the bank. If you face any further problems with the bank, you can approach the banking ombudsman.

Q.How much indian currency can a person carry while going abroad ?

Ans. Residents are free to take outside India (other than to Nepal and Bhutan) currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding Rs. 7,500/ - per person.

Q Can you keep unused foreign exchange –TC or currency ? The Reserve Bank of India (RBI) allows an individual to retain up to $2,000, or its equivalent, indefinitely for future use (there is no limit to the amount of foreign coins you can hold). Any amount over this should be encashed within 180 days of your return.. In case you fail to do so, the card would be suspended and you may face legal action. Alternatively, you can open a resident foreign currency (domestic) bank account and credit the unspent amount.

Q How much Indian currency, in cash, can one take out of the country per visit ?

One ought to carry emergency cash while travelling abroad, but RBI doesn't allow you to carry currency notes over Rs 5,000 per person while on a foreign trip. If you are visiting Nepal and Bhutan, currency notes of denominations only up to Rs 100 are accepted.

The most convenient for you would be to keep $2,000, or its equivalent, in the form of currency and carry the rest either in the form of a traveller’s cheque or a travel card .



Max amount of $ 10,000 or equivalent

Can be bought from authorised dealers/banks

Bought at inter-bank rates, sold at below inter-bank rates. Normally, the rate at which you would buy forex would be marginally more than the IBR rate

But you don’t have to pay a service fee or commission when you buy forex.

Some authorised dealers charge 2-3% commission when you sell.

Travel cards

HDFC Bank Forexplus


Joining fee

Rs 150 Rs 150 Rs 150

Reload fee

Rs 100 Rs 100 Rs 100

ATM withdrawal fee2

$2.00 €1.50 £1.00

ATM balance enquiry fee2

$0.50 €0.50 £0.50

1Foreign exchange rates that banks quote to other banks during transactions.

2For every transaction Travel Cards also charge service fee, some even charge an additional ATM fee.

The card balance can be claimed at prevailing rates on the date of claim. The maximum foreign currency that can be retained in any of the above forms is limited to $2,000; any excess amount has to be encashed.

An exchange rate (IBR) is applied if the Travel card is used for any currency other than the base

currency (with which the card is loaded .e.g. Rupee in case loaded in India).

See RBI Website to know the rules :


Source : Outlook Money and others (edited)

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