Tourism and hospitality sector seeks Budget booster shot to aid recovery 

NEW DELHI:  The tourism and hospitality sector is seeking large scale support from the government in the coming Budget due to the unprecedented impact of the Covid-19 pandemic on the industry. Representatives say that it may take the sector 3-4 years to recover fully. According to industry executives and experts, the government should grant the long pending demand of industry status to the sector and give direct relief, especially to hotels, by lowering GST rates.

Nakul Anand, Chairman, FAITH and Executive Director, ITC Ltd, said India has less than 0.2 million classified rooms which has a direct correlation to country’s global tourism share of around 1 per cent. “If India targets 1 million classified quality hotel infrastructure, which would imply a mammoth capital expenditure of Rs 2.5 lakh crores (assuming a conservative weighted average estimate of Rs 25 lakhs per room) Hotels across the country thus require to be declared as an infrastructure sector so that long term funds are accessible at suitable interest rates to attract private capital hospitality, to create all India jobs and build quality accommodation supply,” he said.

Pavethra Ponniah - Vice President, ICRA said that the industry, requires support. “An Infrastructure status will will help bring down costs of several utilities for the industry,” he noted.  Similarly, the rationalisation of the GST rates from the present 12-18 per cent, and re-introduction of input tax credit for restaurants and domestic travel travelers would play a big role in reviving demand, they said. FAITH also seeks export status, an underwriting fund for travel agents and tour operators, and a global mice bidding fund, among other measures. 

Vivek Agarwal, Partner-Infrastructure, Government and Healthcare (IGH) at KPMG said that given the ongoing vaccination drive and need to bolster health infrastructure,  the government will have limited financial leeway for sector-specific interventions. He added, “Additional measures to provide liquidity for the hospitality industries working capital needs will be welcome. GST restructuring for products such as Medical, wellness and MICE may give the required impetus”.