Lack of immediate direct support in budget has disappointed Indian travel and tourism industry: Nakul Anand
Disappointed by the announcement of Budget 2021, Nakul Anand, Executive Director, ITC Ltd and Chairman, FAITH shared his views on what went wrong.
FAITH, the federation of all the national associations representing the tourism, travel and hospitality industry of India (ADTOI, ATOAI, FHRAI, HAI, IATO, ICPB, IHHA, ITTA, TAAI, TAFI) and cause partner AIRDA were looking forward to the Union budget FY 21-22 with great expectations. However, the budget did not show any signs of relief for the sector.
Expressing his disappointment, Nakul Anand, Chairman, FAITH stated, “Lack of immediate direct support in budget has disappointed the Indian travel and tourism industry.”
The finance minister announced budget proposals for improving rail, road, ports, MetroLite infrastructure and PPP in buses, airports & ports including vista coaches in tourist routes.
Calling these infrastructure measures helpful for boosting tourism in the long term, Anand said, “These infrastructure measures may boost tourism over a long term but only once they are implemented. The measures to change the small companies’ capitalisation, turnover and support to single person company may boost the micro and small tourism entrepreneurs in boosting their organised state. However, the new agri-infra cess will be a further dampener.”
Anand further stated that he is unhappy with the lack of attention that the tourism, travel & hospitality sector received in the budget. He also highlighted that the sector expected support for immediate and short term measures the sector’s revival.
Earlier, FAITH had proposed the creation of a National Tourism Council of Chief Ministers headed by the PM along with tourism minister to ensure that there was an immediate national common tourism vision and revival action plan, post-COVID across the centre and state.
Moreover, the immediate need to grant a common industry status to the tourism sector across the country by including it in the concurrent list was also requested earlier for better management of the sector. However, that too found no mention in the finance minister’s budget speech today.
Anand believes that to ensure the optimum realisation of export potential of Indian Tourism post-COVID, tourism industry should have been fully recognised at par with merchandise exports , export earnings from tourism should have been made tax free and also incidence of taxes in tourism earnings should have been zero rated.
“SEIS of 10 per cent to all foreign exchange earning members in tourism should have been made applicable for 5 years to ensure a post covid recovery. The SEIS for 2020-2021 should have been released,” he asserted.
Additionally, another request that was not addressed during the budget speech was related to Global MICE Bidding Fund. The Global MICE Bidding Fund should have been setup with ₹500 crore to restart immediately and double India’s mice share.
“To communicate a tourism ready India, Indian missions abroad in each country should have been activated with tourism resources for maximum reach,” Anand said.
“There was a need of Corpus of least ₹ 2500 crores for global branding budget to enable Sub Branding of three Tourism segments Indian MICE, Indian adventure, Indian Heritage under the Incredible India main brand to enhance each of these verticals’ global outreach post-COVID to ensure that tourism industry would have become a mainstay domestic industry there was required an income tax exemption on travelling within India income tax credits for up to ₹ 1.5 lakhs when spending with GST registered domestic tour operators, travel agents, hoteliers and transporters anywhere within the country,” he maintained.
In the recommendations sent to the Centre earlier, incentivising Indian corporates to undertake domestic mice (meetings, incentives, conferences & events) by offering a 200 per cent weighted income tax expense was suggested. That was again not taken up during the speech.
A Natural & Cultural Heritage Restoration Fund should have been set up with a corpus of at least ₹ 2000 crores which would have restarted tourism post-COVID and encouraged sustainable and responsible development around each vertical of adventure tourism & cultural tourism.
He further underscored the need to provide seamless tourist transportation experience post- COVID. For that, standardising all tourism transportation taxes, making them payable at a single point to facilitate the ease of doing business was suggested. But nothing was mentioned in this regard as well.
“To increase the intensity of high quality hotel accommodation and MICE Infrastructure in India, all hotels and mice venues across the country needed to be tagged as vital social infrastructure. This would have boosted hospitality capex driven demand in the aftermath of the pandemic,” he stated.
“COVID-19 has damaged the travel and tour intermediaries. It was critical to protect the business of Indian travel agents & tour operators and a structured mechanism was required to future secure travel agents’ payments to ensure that security for travel agents and operators’ survival. This was key as Travel agents’ payments to principals is unsecured credit and some form of mechanisms whether escrow or guarantee or underwriting based mechanisms was needed to be in place to ensure that travel agents and tour operators money stays secure,” he added.
The recently introduced TCS which has made Indian travel agents globally uncompetitive should have been immediately abolished.
It was important to bring overseas global OTAs operating in India into the tax net of GST and other taxes to have a level playing field with Indian travel agents & tour operators.
There was a need for 100 per cent tax exemption and permission to write back income / TDS/ GST etc to travel agents and tour operators on their transactions when airlines windup or closedown. This would have protected them and also Indian consumers.
FAITH Associations were also disappointed by the neglected GST policy issues in tourism sector.
Anand said, “For post-COVID revival it was important to bring down the 18 per cent GST category for hotels to the category of 12 per cent GST. There was a need for providing an option of GST at 12 per cent to restaurants with full set offs. With a lot of state taxes on tourism, travel & hospitality at state level, subsuming of GST on fuel, Inter- state transportation taxes, power cess, liquor excise and also property taxes, cess on parking charges needed to be made available as input tax costs.”
“For revival support, the GST on Tour operators should have been brought down 1.8 per cent with full set offs. Hotels should have been enabled to levy IGST to enable them to give GST credits to Indian corporates who do Interstate events and ensure domestic retention of Indian MICE an upmost necessity post-COVID,” he added.
Further he explained in conclusion, “Not addressing any of these critical measures in the budget announcement has thrown the industry into a state of shock and deep dismay. The tourism, travel & hospitality industry is battling the worst in century crisis from the impact of Covid 19, revival from which will not be seen minimum for the next financial year till vaccination is fully undertaken with no observed side effects in all source and destination markets. FAITH Associations had been vigorously interacting with all Government Stakeholders with the hope to immediately pull Indian tourism out of the covid recessionary conditions in the crisis of the century for tourism, travel & hospitality. While infrastructure measure announced as budget announcements, may boost tourism over long term, the opportunity for immediate support has, regretfully, been missed out.”
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