Introduction. Taking into consideration the possibilities of growth and returns the tourism sector provides to the state of Punjab, of recent the Government of Punjab and the Amritsar city administration have made huge effort in expanding this sector by tapping and promoting various sites and activities for tourist absorption. This study delivers reasons for tourism development in Amritsar and proposes possible information for stakeholders to ensure the suitable tourism planning and management, especially contributing towards the local community. Materials and Methods. Prominent categories of business operators i.e., restaurant owners, traditional shopkeepers, employees from the hospitality sector which included hotels, guest houses, hostels and lastly travel agency owners were interviewed for this study. This sample of 120 respondents was drawn from the inner and outer city areas of Amritsar city of Punjab (India). Results. Tourism is emerging as a ‘saviour economy’ for Amritsar, as a major part of Amritsar’s economy directly and indirectly is dependent on this sector. Business community in Amritsar largely perceives the impacts of tourism development positively. However, respondents felt that the business in Amritsar is also getting negatively affected due to mono–centric development, overflow of tourists and expansionist tourism-centric policies. Tourism development policy can perform better by taking local economies into consideration and increasing participation of local communities in tourism development. This way tourism can create an undeniably positive impact on local communities and local businesses. Discussion and Conclusion. As the current development model of the city is tourism centric, there is an insufficiency in growth of allied sectors as well as in development programmes and a miscoordination is there between different significant stakeholders. This study will be useful to various stakeholders like development authorities, planners, and scholars etc who are interested in addressing the developmental issues being faced by tourist cities. The usefulness of this study lies in the fact that it demonstrates how tourism can be used as a tool for regional development by gaining resident support.