FHRAI submits representation requesting for urgent special measures for sector’s survival

India’s apex hospitality Association and the voice of the hospitality industry - Federation of Hotel & Restaurant Associations of India (FHRAI) has submitted a representation to the Hon’ble Finance Minister (FM) – Nirmala Sitharaman requesting urgent special measures for the survival of the Tourism & Hospitality Sector. The association has stated that the successive waves and continued disruptions have created a volatile economic environment in the sector making survival the key focus. FHRAI has asked for moratorium for loans taken by the tourism and hospitality sector and a special resolution framework for restructuring of the loans along with moratorium extension of minimum one year for loans availed under ECLGS.

Among other measures, FHRAI has requested for working capital support with a guarantee from the Central Government to Banks & NBFCs. It has asked that the Rs.60,000 Crore Loan Guarantee Scheme for COVID Affected Sector be notified with immediate effect and lastly, it has demanded for direct benefit transfer of basic pay to employees of the hospitality sector.

“The Hospitality industry in the country has been severely impacted ever since the COVID19 pandemic hit the country in early 2020. The first lockdown and the restrictions put the sector at a stand-still for almost eight months. While the industry was hoping for some revival post-November 2020, the second wave stormed in by April - May 2021 totally deflating the business and the hope of the industry. We are presently in the midst of the third wave and the industry just will not be able to sustain another storm. In anticipation of the extent of losses and to merely be able to survive the repercussion of the third wave, we request the Hon’ble FM to immediately announce special measures for our sector. As the sector was inoperative due to restrictions, it is not in a position to repay loans already taken. Our foremost request is for a moratorium of minimum one year for repayment of loans along with interest for the hospitality industry. In addition to this, we request that in view of the unparalleled situation of the tourism and hospitality sector, another round of resolution framework be announced for the sector for restructuring of its loans,” said Gurbaxish Singh Kohli, Vice President, FHRAI.

FHRAI has stated that the financial loss to the industry from the preceding two waves caused around 30 per cent of hotels and restaurants to shut down permanently. The remaining establishments continue to run in losses even today. The hospitality industry has reported losses of a whopping sum of Rs.1.40 lakh Crores and around 50 million jobs were lost due to the pandemic.

“With one more tourism and business season washed off, the sector has nothing to hope for. It is staring at a dark future in the midst of increasing debt burden, obligations and statutory liabilities but with no means and ways to meet them. Under the present circumstances, we request the FM to provide the industry a moratorium extension of minimum one year for the loans taken under the ECLG Scheme. The repayment schedule for the loans taken under ECLGS 1.0 and 2.0 have started in most of the cases. But unfortunately, those establishments do not have the cash flow to repay the loans due to the bad state of affairs in the sector. There wasn’t any business or income for the sector for almost ten months in the previous year and the present surge in cases have made conditions even worse for the sector,” Kohli added.

FHRAI has also requested for the working capital requirement of the hospitality sector to be supported by the Government with a long-term funding scheme with a low-interest rate and a guarantee from Central Government to Banks and NBFCs. It has once again requested to notify the Rs.60,000 crore Loan Guarantee Scheme with 100 per cent Government guarantee and long-term repayment options with immediate effect as an effective measure to address the colossal damages suffered by the tourism and hospitality sector in the country.

“The Ministry has neither released any Operational Guidelines nor any other details of the scheme so far. The Loan Guarantee Scheme introduced simultaneously for the Health Sector was notified immediately and necessary guidelines were introduced by NCGTC. Other than this, we request that an amount equivalent to the pre pandemic basic salaries of tourism, travel and hospitality employees be sent each month in a direct benefit transfer to the employees against their PAN cards. Millions of employees from the sector had lost their jobs during the first two waves of the pandemic. A similar situation is emerging from the third wave as well. A direct salary transfer will support the livelihoods of crores of people till the time normalcy is restored in the sector. Since trained and quality manpower has a pre-dominant role in the tourism and hospitality sector, this support is very vital to restart and revive the Indian tourism,” Kohli concluded.