Foreign investments reviving the adversely affected Tourism and Hospitality Industry

Highlighting the importance of hospitality, travel and tourism sectors, Vishal Yadav, CEO & Founder of FDI India, pens down his thoughts on the revival and survival of the industries.

Tourism and hospitality are the second largest contributors to the national GDP and employment growth among the various service sectors of the country. Together, they created 330 million jobs across the world in the year 2019. However, these are the two sectors which have borne the brunt of Covid-19 the most. Together, the two have experienced an economic loss amounting up to Rs 15 lakh crores since the outbreak of the unanticipated pandemic. Now, juggling for sustenance and growth, tourism and hospitality have been actively seeking support from the government and other bodies so as to get back on track and rebuild their lost sheen and strength. 

The government too has been taking several strong efforts to build a supportive ecosystem which could forge and reshape the growth of tourism and hospitality in India. A slew of initiatives has already been announced including interest free loans to finance working capital, government stimulus packages, tax exemption for a fixed number of years, etc. A five-year tax holiday has already been announced for 2-,3- and 4-star category hotels which are located around UNESCO World Heritage sites (apart from Delhi and Mumbai).

Various active steps have also been taken to boost investment in the two most lucrative industries. At present, 100 per cent FDI in hospitality and tourism is being allowed through the automatic route. During the Jan – March quarter of FY20, the two sectors attracted FDI worth $862.78 mn (Rs 6,390.06 crore), as compared to $1,216.10 million (Rs 8,666.87 crore) in Oct-Dec quarter of FY20. Moreover, ‘Invest India’ has joined hands with the top global consultancy firms to chalk out a robust economic revival strategy.

With the doors of foreign investments opening up, the recovery signs are gradually appearing, with more likely to show up soon. Going forward, these cash inflows can play a crucial role in pulling hotels and tourism out of their current dampened state, and put them on a speedy path to recovery. Together with domestic investments and other government measures, many opportunities can be created to reboot India’s tourism and hospitality. This said, the chances of recovery clearly lie in the infusion of investment, moratorium on loans, deferment of dues, measures like tax holidays, rebates, subsidies, etc. 

Moreover, the industry is looking forward towards the introduction of strong rescue packages, policies and intervention pertaining to foreign debts, loans and equities. The current waves of turbulence can be subdued by rightly assessing the current challenges and then balancing all parameters and initiatives efficiently. Surely, it may take a few years till the two sectors regain their shine, and re-emerge as the key drivers of the country’s growth. Recovery of these two prime sectors would clearly mean recovery of the economy itself.


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