The present research focuses on the role of India’s tourism sector as a major source of foreign exchange earnings. The analysis reveals a consistent increase in foreign tourist arrivals and foreign exchange earnings between 2001 and 2019. However, the COVID-19 pandemic severely disrupted this growth trajectory, leading to a drastic fall in both tourist arrivals and earnings during 2020–2022. Foreign exchange earnings represent a significant component of a country’s economic strength and contribute directly to national development. Tourism, being one of the largest service industries in India, has been a crucial driver of this economic power. Before the pandemic, India recorded ₹6,61,21,166 crore in foreign exchange earnings in 2019. However, during the pandemic, foreign tourist arrivals declined sharply to 2.74 lakh in 2020, reducing earnings to just ₹50,136 crore. Despite these setbacks, India’s tourism sector still contributed around 5.8% to the national GDP in 2021, amounting to over ₹13 billion. This study highlights both the economic importance of tourism and the vulnerabilities exposed by the global pandemic.