Tourism and Hospitality Associations Seek Special Package in Budget 2021

Hyderabad: Associations in India’s tourism and hospitality sector are hoping for government relief in the form of reforms in the Union Budget 2021 for surviving and recovering from a precarious situation brought about by the COVID-19 pandemic.

The Federation of Associations in Indian Tourism and Hospitality (FAITH) is hoping that the government announces a special financial package – as has happened in developed countries – so that the tourism sector could be revived and millions of jobs saved.

“The tourism industry is the worst affected due to the pandemic. About 30 million people out of about 75 million people who are directly and indirectly employed in the industry have lost their jobs last year. A further 10 million workers are on leave without pay. According to our estimates about 53,000 travel agents, 1.3 lakh tour operators and thousands of tourist transporters and guides are struggling to survive,” said Subash Goyal, honorary general secretary of FAITH.

The federation is expecting the budget to provide a year’s tax exemption for the industry; exemptions from all statutory payments such as electricity bills, excise fees, transport permits during the lockdown period, priority funding or loans from banks and granting infrastructure status to the tourism industry.

“A global MICE (Meetings, Incentives, Conferences and Exhibitions) bidding fund is to be created so that India can bid to get more international conferences, meetings and events to take place in India,” said Goyal.

The National Restaurant Association of India (NRAI) expressed similar expectations from the budget. “The restaurant industry is gasping for some fresh oxygen. With almost 30% of the restaurants shutting down and the remainder operating at a much-reduced capacity, I reckon that almost 40% of 7.30 million jobs, or about three million jobs are already gone. We need some immediate support in the form of liquidity to arrest this trend and survive,” said Anurag Katriar, President of NRAI.

The association has recently urged the financial minister to restructure GST rates for the sector.

“We definitely need an immediate rationalisation of the current GST structure in order to survive. The current rate of five per cent with no Input Tax Credit (ITC) is structurally flawed. It doesn’t distinguish between a kiosk or a five-star hotel and espouses the principle of

‘one-size-fits-all’. This needs to change. We have suggested a very logical revenue-based variable GST rate structure which will not burden the small players but will immensely help the larger organised players and improve the GST collection,” added Katriar.

Reportedly, between March and August last year, an estimated 5.5 million jobs were lost in the travel and tourism sector and about 3.8 million jobs were lost in the hospitality sector.

Despite numerous appeals from the representatives of restaurants and tourism industry, who sought the same support being provided in developed countries, no special packages were announced by the Central Government. However, the associations hope that the reforms in the national budget is an opportunity for the revival of the crisis-hit sectors.

NRAI has pointed out that the government needs to address e-commerce related concerns in the food service sector, such as the lack of data sharing by the aggregators, their unilateral decision-making on listing and the terms of engagement and year-round platform driven discount that causes losses to the exchequer and the business. The are concerned about the opaque nature of their algorithms and their ability to create their own brands while riding on the restaurant data that they own.

“Finally, with e-commerce emerging as a very critical arm for the overall economic growth of the nation, we seek a strong and equitable e-commerce policy in the food service sector. This will help us grow the segment exponentially, which will also boost the exchequer,” said Katriar.

FAITH estimates that the tourism industry suffered an estimated Rs 15 lakh crore loss in the last three quarters. “This was the worst three quarters ever for the tourism industry over a century and this is expected to play out till another two quarters till a vaccine is deployed across all source and destination markets,” FAITH chairman Nakul Anand was quoted saying.