Budget 2015: What does Indian tourism & hospitality industry want?
24 Feb 2015

The inclusion of Tourism in the Five Ts during last year’s budget has made the industry expectant as it sits with bated breath for Union Budget 2015-16.  

The government has shown some intention in the past one year to develop the industry by recognizing its role as a key player in driving socio-economic progress through creation of jobs, enterprise, infrastructure development and foreign exchange earnings. 

The Ministry of Tourism (MoT) has sought for an allocation of Rs 3,000 crore in the upcoming Union Budget 2015-16. 

While increase in fund allocation is definitely a priority with, the industry also has definite recommendations on how these funds should be used. 

Rajesh Magow, Co-founder, MakeMyTrip says, “If we have the right transportation with hygienic and user-friendly passenger amenities and attractions such as theme parks, more and more tourists will be willing to visit the country. Poor infrastructure is why a majority of travelers prefer other countries over India as they get better value for money there.” 

India Hospitality Review talks to industry’s biggies to know about the prime talking points in their expectations from this year’s Union Budget. 

Infrastructure Development: Tourism and hospitality industry has time and again mentioned at various forums that a strong infrastructure is critical to the opening of tourism industry in the country. It has advocated for concrete steps to strengthen connectivity and accommodation facilities. 

During its pre-budget discussion with the Finance Minister on Budget, FAITH recommended specific steps that the Government can take in order to develop a strong infrastructure that could support the sector. The organisation demanded for a Public Private Partnership model to be incorporated in order to develop various sites which are of importance for tourism. 

For hospitality industry, FAITH recommended the ministry to award infrastructure status to hotels, resorts under section 80iAB. It has also sought for classification of hotel CAPEX (excluding land) of Rs.20 crores as infrastructure projects under RBI infrastructure lending norms. 

The organisation has also made a strong case for PPP on development of heritage monument and global convention centers. 

However, while the past year has seen an increase in hotel development projects, with more and more entrepreneurial interest in this sector, connectivity remains a very big challenge. With the sad demise of Kingfisher Airlines, the supply side suffered a massive blow. In addition, SpiceJet’s shaky performance has increased concern of the industry. In such a scenario, the industry has been asking for major overhauling of aviation policies.Entrants like Air Asia and Vistara should be encouraged to balance the supply-demand ratio, opines the industry. 

Moreover, for better connectivity, the government needs to move beyond simple campaigning and actually enable better connectivity to not only high-traffic destinations but also remote, far-off destinations. 

Sharat Dhall, President Yatra.com, bats for better facilities in destinations that are far-off and lack some basic requirements to support tourism industry. He says, “We are hoping infrastructural improvement especially in the smaller towns and cities that house key tourism destinations. We are also hopeful that this budget will set aside a significant pool of funds for better connectivity by building new airports and better roads to key tourism destinations in the country.” 

Madhavan Menon, Managing Director, Thomas Cook India says, “Immediate investment via allocation in road, rail, air connectivity and hospitality, in addition to hub and spoke airports; focus on leveraging cruising via river and coast waterways will see long term benefits and result in a vibrant multiplier impact across both inbound and domestic tourism.” 

FAITH has suggested that military and dormant air stations in the northeast and hill states be activated. 

Commending the steps taken by the government, Vikram Malhi of Expedia said, “ We would wait to see more impetus on tourism in this Union Budget, with not only development of newer areas and tourist circuits, but also up gradation of infrastructure at the existing high traffic tourist destinations.” 

Tax Rationalisation: Quoting the importance of this sector for country’s economy in terms of income and employment generation, the industry stalwarts have been pushing for relaxation in tax norms. 

The industry has been strongly lobbying for passing of GST tax law, and to add it FAITH has requested the ministry to include tourism and hospitality industry in the lower slab of GST, which it predicts to be between 6-8%. 

In addition, it has also sought for tax exemption for incentive tourism, adventure tourism, travel agent services etc. 

When it comes to airlines, the industry is of the opinion that reduction in ATF price should be leveraged. The VAT on ATF should be reduced or made uniform. 

Menon says, “Standardisation of taxes across state borders would at once greatly simplify the tax structure bringing in welcome standardisation. 

Taxes levied by airports should also be monitored so that airlines do not bleed because of unfavourable working conditions. In fact, incentives should be granted to airlines interested in making a particular place its hub.  

However, at a more basic level, the industry expects the Finance Minister to clarify and spread awareness about tax laws for them to comprehend.  

Rajeev Wagle, MD, Kuoni India says, “A few issues on service tax need clarifications. We hope that this year’s budget will do the same. Importance must be given by the government to GST. We want to look at the operational details of full GST.” 

Strong marketing and promotion initiatives: Government needs to look for strategic initiatives to market brand India in tourism market. Apart from showcasing India as an affordable tourist destination, it should also venture into alternate segments such as adventure and heritage tourism. The campaigns need to highlight various aspects to concretize the image of India as a safe and easy destination to traverse. 

A demand needs to be created in world tourism market in order to attract more tourists. While e-visa and visa-on-arrival is being seen as a major step in this direction, FAITH recommends that the facility should be made available for citizens of all countries except negative list countries. 

The industry has also appreciated and supported Clean India campaign which marks an attitudinal change. But to add to this, and further bolster India’s Make in India campaign, government initiatives should promote India’s business-friendly environ. Steps need to be taken to enable easy debt funding and single-window clearances. 

Travel and tourism has contributed Rs 2,17,810 crores to India’s GDP in 2013, accounting for a 6.8 per cent share and is the third largest foreign exchange earner for the country. 

According to the United Nations World Tourism Organization (UNWTO) forecast, the travel and tourism industry in India is expected to grow by 8% per annum between 2008-2016; Foreign exchange earnings by 14% during the same period.