The Tourism Ministry on Monday proposed a slew of measures to boost the sector. This includes lower Goods and Services Tax (GST) rates for five-star hotels, land on cheaper lease amount for hotel construction, “infrastructure status” for the entire tourism sector to help them get finance at affordable rates, fewer permits to open hotels, as well as establishing a National Tourism Regulator and the related regulatory framework.
The aim is to ensure that within five years the sector generates 100 million jobs (from the current 43 million), attracts 40 million tourists (from 14.4 million now), and brings in $100 billion worth of foreign exchange earnings (from around $24 billion at present).
Joint Working Groups
The Ministry has also set up four Joint Working Groups (JWGs) - one each on the hospitality sector, startups, ‘MICE’ or Meetings, Incentives, Conferences, and Events-tourism, and niche tourism - to work on recommendations from the industry, and bring out an “Action Plan” with specific targets and timelines to achieve them. Each JWG will have a representative each from the Tourism Ministry, Department of Industrial Policy and Promotion, the industry, and the government’s investment facilitation and promotion wing “Invest India”. The JWGs will submit their respective reports within a month to the government for its consideration. The government will put out these recommendations in public domain and bring out regular Action Taken Reports on them.
Addressing reporters, Tourism Minister Alphons Kannanthanam said his ministry will soon take up with the Finance Ministry the proposal for lowering GST rates on five star-hotels. Currently, there is a 28% GST (the highest slab) on rooms with tariff (per room per day) above Rs 7,500. According to the tourism industry, the 28% GST rate is making India non-competitive. Foreign tourists are skipping India, and instead going to neighbouring countries such as Thailand, Malaysia and Singapore where the tax rate on hotels is only 7%, 7% and 6%, respectively, they added.
Mr. Kannanthanam said costly land rates are making it difficult to construct hotels. States should either give land on concessional rates, or adopt a model where the lease amount is low but at the same time hotels are required to give the State government an agreed share of their (hotel’s) annual turnover. He said this will help in construction of more hotels with per day room tariff of less than Rs 2,000 that “budget tourists” prefer.
Infrastructure Status
On the proposed national tourism regulator, the minister said it is to bring out and implement a regulatory framework for the sector, including for home-stays and online portals. “Infrastructure status” to the hotel sector will also help for the sake of constructing more budget hotels, the minister said. He said currently the infrastructure status is only available for projects above Rs 200 crore, adding that it should be extended to projects above Rs 50 crore.
Pointing out that currently, the industry needs to obtain over 70 permits to open a hotel, the minister said the number of permits should be reduced drastically from such “outrageous” levels. The minister said the work being done by the Madhya Pradesh government, especially on making it easier for the industry to get land and the required infrastructure, will be passed on to other State governments as a model that they can consider adopting. He said the Centre will also work with the industry to soon bring out a massive skill development programme aimed at the tourism industry, in a manner that will help people secure jobs.
Meanwhile, Tourism Secretary Rashmi Varma said the government has offered 97 (heritage) monuments under Archaeological Survey of India (ASI) to the private and public sector corporations for developing amenities (including toilets and clean drinking water) around/near the monuments in order to attract more tourists. Soon, non-ASI sites will also be offered for the same purpose. Already, the companies have expressed interest to set up such amenities in seven ASI sites, she added.