http://www.ft.com/ By Joe Leahy: Since the earliest days of international travel, foreigners have seen India as one of the world's ultimate destinations.

After a tour of India in 1890s, the American author Mark Twain wrote: "So far as I am able to judge, nothing has been left undone, either by man or nature, to make India the most extraordinary country that the sun visits on his rounds."

Twain's observation of the world's second-most populous country is no less true today. Few destinations can boast the colour and contrast of India.

Ox carts jostle with sparkling new Hondas and Toyotas on major highways. Noisy, colourful religious festivals frequently bring modern commerce to a halt. And scores of ethnic and social groups pursue their age-old customs across a landscape that ripples down from the Himalayas in the north, through the searing heat of the deserts and plains to the rainforests and beaches of the south.

Yet, despite its unrivalled treasures, which include 27 world heritage sites - one of the greatest concentrations in any one country - India punches below its weight in terms of the business of international travel. To realise its enormous potential, the sector must overcome the same challenges that dog other areas of Indian industry: mainly poor infrastructure, shortages of skilled personnel and red tape and taxes, which drive up costs, especially of airfares and quality accommodation.

"Poor infrastructure, inadequate connectivity and high hotel tariffs, while discouraging foreign visitors, also lead to an increase in the outflow of high-spending domestic tourists from the country," said a report by the working group on tourism at the central government's Planning Commission.

However, India has recorded above average growth in international visitor arrivals in recent years. Last year, 5.08m tourists visited from abroad, up 14.3 per cent against a year earlier, and up more than 100 per cent from five years ago.

The industry also generated $10.7bn in foreign exchange last year, an increase of 24.3 per cent over 2006. Foreign tourism is underpinned by the domestic market, with Indians making 526.6m interstate trips last year, up 14 per cent on 2006.

India's recent success in generating more visitor arrivals has been partly due to its rapid economic growth - almost 10 per cent during the latest fiscal year.

Growing prosperity has brought an increase in business travel and raised the country's profile among mainstream international tourists. This, combined with an effective marketing campaign by the Ministry of Tourism, under the slogan of "Incredible India", has increased foreign curiosity.

But, while it is growing fast, India remains a minnow on the international tourism circuit, generating the same visitor arrivals and revenue as the tiny city state of Singapore. India was ranked 42nd last year in terms of world tourist arrivals and accounted for just over half a per cent of global market share.

China, Asia's other large rapidly growing economy, was the world's fourth largest market for visitor arrivals last year, with 54.7m foreign tourists, up 9.6 per cent on a year earlier.

The government's first priority to drive growth is to improve infrastructure and logistics.

This is already happening in the main cities, with large-scale upgrades