Budget 2021: Lack of immediate direct support disappoints travel & tourism industry
FAITH the policy federation of all the national associations representing the complete tourism, travel and hospitality industry of India was looking forward to the Union budget with great expectations
Lack of immediate direct support in budget has disappointed the Indian travel and tourism industry
FAITH the policy federation of all the national associations representing the complete tourism, travel and hospitality industry of India (ADTOI, ATOAI, FHRAI, HAI, IATO, ICPB, IHHA, ITTA, TAAI, TAFI) & cause partner AIRDA was looking forward to the Union budget Fy 21-22 with great expectations.
The union budget laid out budget proposals for enhancing rail, road, ports , metro lite infrastructure & PPP in buses, airports & ports including vista coaches in tourist routes. These infrastructure measures may boost tourism over a long term but only once they are implemented. The measures to change the small companies capitalisation and turnover and support to single person company may boost the micro & small tourism entrepreneurs in boosting their organised state. However the new agri infra cess will be be a further dampener.
However the tourism, travel and hospitality industry was looking at support for immediate and short term measures for critical revival. This has not happened in the budget announcements.
To ensure that there was an immediate national common tourism vision & revival action plan, post Covid across the centre & state, FAITH had proposed the creation of a National Tourism Council of Chief Ministers headed by the PM along with tourism minister.
There was an immediate need for common industry status across the country for the complete tourism industry by putting it in the concurrent list to organise the industry and make them post COVID ready.
To ensure that the export potential of Indian Tourism would have been realised 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% to all foreign exchange earning members in tourism should have been made applicable for 5 years to ensure a post covid recovery.
A Global Mice Bidding Fund was required to have been setup with ? 500 crs 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.
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 Rs 1.5 lakh when spending with GST registered domestic tour operators, travel agents, hoteliers and transporters anywhere within the country.
To generate post Covid corporate travel resumption it was required to give incentives Indian corporates to undertake domestic mice (meetings, incentives, conferences & events) by offering a 200% weighted income tax expense
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.
Post Covid, there was a requirement for a truly seamless tourist transportation experience by standardising all tourism transportation taxes making them payable at a single point which will facilitate the ease of doing business.
To increase the intensity of high quality hotel accommodation & Mice Infrastructure in India all hotels & 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.
Covid has damaged the travel & 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 & 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 & tour operators money stays secure.
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% 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 looking forward to Gst policy issues in tourism being addressed.
For post covid revival it was important to bring down the 18% GST category for hotels to the category of 12% GST. There was a need for providing an option of GST at 12% 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% 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.
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.
Nakul Anand is Chairman of FAITH. The views expressed are personal