Give a budget that saves tourism…

As we get closer to Budget 2021, BW HOTELIER connected with the travel trade and tourism leaders to understand their budgetary expectations. One thing that echoed in each conversation was a resounding need to pay the deserved attention to this segment as far as the allocation of funds is concerned. Apart from that, the critical aspect of waiving off TCS, allocating funds for tapping the dormant potential of island tourism, infrastructure development, and more surfaced in the discussion. Read on to learn what the leaders have in mind regarding Budget 2021.

In 2019, India was standing at the 34th rank in the Travel & Tourism Competitiveness Report, released by the World Economic Forum. Foreign tourists had also registered a growth of 3.2 per cent. The industry was faring well globally and back home, various other schemes like 'Swadesh Darshan Scheme,' 'Adopt a Heritage: Apni Dharohar, Apni Pehchaan,' 'Incredible India,' 'PRASAD Scheme,' etc., were performing well to bolster the potential of tourism in the Indian land.

However, what dampened the efforts was the COVID-19 pandemic because of which flights were cancelled, and international and inter-state movement was banned. Countries

across the globe enforced lockdowns, and the Travel and Tourism sector came to a halt. As time passed and lockdowns were relaxed, the sector did find respite but not to the pre-pandemic levels. As the efforts to revive the sector are on, it is imperative to cater to this industry's demands, and so we present insights from the industry leaders.

Time to treat the tourism industry well 

The tourism industry is seeing blockades due to the reduced inflow of tourists. It is, therefore, imperative to support the industry with the necessary inputs. 

Commenting on the introduction of a survival package and extension of Service Exports from India Scheme, Pronab Sarkar, President, IATO said, "The budget should have the Survival Package in store for the industry as its first and foremost priority. Here comes the need for Extension of service exports from India scheme (SEIS) for the tourism industry for the next five years in the new foreign trade policy 2021-25." 

Sarkar further said, "With the help of SEIS benefits tour operators are utilising the funds for overseas marketing, promotion and pass on the benefits to foreign tourists by giving value addition and showcasing India. Viewing the above the admissible rate of SEIS may be hiked from 7 per cent to 10 per cent of net foreign exchange earned by the tourism industry and the release the order for distribution of SEIS scrips for the year 2019-20 as this has not been declared till date. Rationalisation of taxes is also imperative." 

Highlighting the fact that the tourism industry also generates foreign exchange at par with other industries, Sarkar stated, "The expectation is to treat the tourism industry as a deemed exporter at par with the IT Industry. The tourism sector, too, earns valuable foreign exchange but is not exempted from IGST even though it provides services to foreign clients. Suitable amendments to correct this anomaly are needed, which will not require inbound tour operators to charge GST from Foreign Tour Operators. Secondly the tour operators suffer from multiple taxation at different levels as they offer multitude of services. IATO urges the government to either lower the GST charged from the tour operators or allow input tax credit to enable Indian tour operator to pass on the benefits to foreign tour operators/ foreign tourists, this will remove cascading effect on tour operator's services."

Sarkar stated that IATO recommends the complete exemption of GST/IGST on the services provided outside India i.e. in neighbouring countries, even if the package includes an India tour. He believes that this will allow the bookings to come to Indian Tour operators instead of such bookings going to tour operators based in neighbouring countries. 

"This will add considerable foreign exchange for the country. The provisions of TCS should be made applicable for persons / companies resident in India and not to foreign citizens / foreign tour operators located outside India. Refund of IGST paid by the tourist leaving India on the supply of goods taken out of India -Tax Refund for Tourists (TRT) Scheme under section 15 of the IGST Act 2017 to be implemented," he concluded.

Hoping to kick-start unaddressed segment with budget 2021

Naveen Rizvi, Executive Director, Integrated Conference & Event Management said, "The year 2020 proved to be a halt in the industry's growth when the COVID-19 pandemic stuck. However, with the upcoming budget 2021, the industry which is awaiting a kick start, support from the Government remains a silver lining." 

Rizvi further added, "To ride through the COVID-19 crisis, the Central Government should provide a tax holiday or 50 per cent tax reduction for a minimum of one year to MICE and Tour operators, hotels, airlines, and other stakeholders to make India a lucrative destination for overseas visitors. To develop new destinations, the central Government must provide/allocate funds to boost 'Island tourism' in the country. We must learn from the small country 'Maldives.' The Government should invest in developing infrastructure in Andaman and Lakshadweep Islands to enhance tourist footfalls. The Budget should have provision for setting up Convention Centers in far-flung areas of the country especially Sikkim and Guwahati in North East India which are still untapped to its potential."

Rizvi believes that the lack of necessary tourism infrastructure is deteriorating India's foreign and tourist potential in lesser-known destinations. Emphasizing the same, he said, "Infrastructural developments would generate revenue for locals generate employment in-country, and also boost domestic tourism."

"We are optimistic that the Government will bring necessary reformations to enable the sector to get back into business, save jobs, and also promote India as an attractive travel destination," he concluded.

Prioritising the tourism industry is the need of the hour

Addressing the issue of non-consideration of the tourism sector while allocating economic relief packages, Madhavan Menon, Chairman & Managing Director, Thomas Cook (India) Ltd. said, "The travel and tourism industry has been one of the most severely impacted in the ongoing COVID-19 pandemic, and we are staring at a long road to recovery. While the Government has rolled out economic relief packages for several industries, the Tourism sector has been noticeably absent, and the Union Budget offers valuable opportunities to address the crisis in the sector." 

He said that the Tourism sector, being a critical contributor to the Indian economy and a concrete employment generation source, deserves top priority in the Union Budget 2021.

Recently, the emergence of new strains of Coronavirus brought international connectivity to a standstill. Discussing the resultant scenario in the tourism sector and revival of the same, Menon said, "With the extended ban on international commercial flights, domestic tourism offers strong potential, and this requires priority support. Or swathes of tourism-dependent communities will languish, and with it, our precious local art forms, heritage, and culture will dwindle. Innovative and viable initiatives like UDAN that catalyse regional connectivity and offer access to India's hidden gems need to see sustained delivery. Budgetary outlay that retains long term impact via infrastructure development is equally essential– roads, railways, airports, waterways; as also health, safety, and sanitation – a top priority in travel decisions in this COVID era."

"I also look forward to the Government support and priority action: soft loans to finance working capital, incentivising tourism spends by providing income tax concessions, payment of overdue SEIS benefits, easing of indirect taxes, and waiving off TCS to help aid recovery," he concluded. 

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Budget 2021 Pronab Sarkar Naveen Rizvi


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