Union Budget 2018-19 – Tourism Industry Demands Overlooked
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Pronab Sarkar, President, Indian Association of Tour Operators (IATO)
“The tourism sector had pinned their hopes on the budget in anticipation of certain key measures such as Export Status to tourism industry and some reliefs on tourism and hospitality sector. However against expectations, nothing has been mentioned about this in the budget and industry was left with GST issues to continue. After the implementation of GST with effect from 1st of July 2017, tourism has been taxed heavily due to multiple taxes on the services. We have been pleading with the government that our taxes are much higher than our neighbouring countries and we need to be at par to compete in the International market to attract more foreign tourists to our country and to earn much wanted foreign exchange and to create more employment, tourism industry needs to be boosted by giving Export industry status to tourism industry and keep tourism services which earn foreign exchange from out of GST/ IGST. However our this demand has not been met.”
“On the positive side, emphasis on infrastructure development has been announced by the Hon’ble Finance Minister, which will have very positive impact on tourism growth such as:-
• Develop ten prominent tourist sites into Iconic Tourism destinations by following a holistic approach involving infrastructure and skill development, development of technology, attracting private investment, branding and marketing.
• Tourist amenities at 100 Adarsh monuments of the Archaeological Survey of India will be upgraded to enhance visitor experience.
• Redevelopment of 600 major railway stations, All stations with more than 25000 footfalls will have escalators. All railway stations and trains will be progressively provided with wi-fi. CCTVs will be provided at all stations and on trains to enhance security of passengers with Modern train-sets with state-of-the-art amenities and features
• Under Regional connectivity scheme of UDAN initiated by the Government, shall connect 56 unserved airports and 31 unserved helipads across the country. Airport Authority of India (AAI) has 124 airports government will expand airport capacity more than five times to handle a billion trips a year under a new initiative – NABH Nirman
• Develop 99 smart cities
• Develop 5 lakh hotspots in rural areas.
• Government has already initiated in current year, ropeways to promote tourism, logistics parks and expanded the scope of railways infrastructure to include development of commercial land around railway stations.
Besides, government has also announced to extend benefit of the reduced corporate tax of 25% for companies with turnover of up-to Rs. 250 crore from Rs. 50 crore earlier, which will boost small and medium companies.”
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Dilip Datwani, President, Hotel and Restaurant Association of Western India (HRAWI)
“The hospitality industry feels dejected and is extremely disappointed with Union Budget. Tourism contributes 7.5 per cent to India’s overall GDP and hospitality is the backbone of tourism. Hospitality is the single biggest contributor to India’s tourism GDP and its growth or decline or stagnancy directly reflects on the health of tourism in the country.”
“The foreign exchange earnings (FEE) from tourism amounts to roughly 23 billion U.S. dollars and once again the largest chunk of this earning is generated by the hospitality industry.”
Employment generation which is one of the focus areas for the Government has the biggest support of the hospitality sector. It directly employs over 12 per cent of the Indian workforce and is one of the biggest employers of unskilled and semi-skilled labour.
According to a KPMG report, the hospitality sector is expected to grow at a CAGR of 16.1 per cent to reach Rs.2796.9 thousand crores in 2022. Despite having Hospitality as an asset at its disposal which can propel the country’s growth, the Government has yet again chosen to ignore its potential.”
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Rakshit Desai, Managing Director, FCM Travel Solutions, Indian subsidiary of FCTG, Australia
“Introduction of several initiatives to improve infrastructure facilities in Union Budget 2018 bodes well for travel and tourism sector and will help reinforce India’s image as a tourist destination internationally. Significant investments to address concerns around connectivity with impetus on development of highways and arterial roads, railways and airport infrastructure is bound to push inbound arrivals. A dedicated focus to promote seaplane activities in the country, along with development of heritage sites and iconic tourist destinations will further enhance appeal of India as a destination of choice. ‘Namami Gange’ will provide further fillip to religious tourism from both domestic and international travellers.”
“Overall, it is a budget with a developmental agenda and could have benefited the tourism sector little more with announcements around simplified GST along with detailed FAQs for the travel industry.”
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J.B Singh, President and CEO, InterGlobe Hotels Private Limited
“Overall, the budget points towards a more progressive future. Several initiatives from the infrastructure standpoint will help boost growth and in turn impact tourism positively. Primary among these are the proposed plans of improving intra-city train networks in Bangalore and Mumbai as well as completion of close to 9,000 kilometres of national highways. Additionally, the budget also provides a huge boost to the aviation industry with plans of increasing the number of airports to almost five-fold from the current numbers. This will increase mobility for the entire nation and in turn, provide a major fillip to tourism. On the financial side, reduction in the corporate tax rate to 25% for companies under the 250-crore turnover mark will likely increase re-deployment of capital among SMEs; this in turn should increase travel and further boost hotel and tourism-related growth.”
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Peter Kerkar, Group, CEO, Cox & Kings Ltd.
“From a tourism standpoint, the government’s move to develop 10 prominent tourist sites as iconic tourism destinations is welcome as it diversifies our product offerings and creates tourism clusters. Along with this, the move to upgrade tourism amenities at 100 ASI managed monuments will enhance the visitor experience. All this will generate huge economic activity as it also involves infrastructure and skill development in the region. Tourism is the largest employment generator in India and this will open up huge employment opportunities.”
“The move to expand the UDAN (Ude Desh ka Aam Nagrik), to over 56 unserved airports and 31 unserved helipads will open up huge opportunities for the travel industry as connectivity will improve and people in these areas will be able to travel seamlessly within India and overseas, thereby giving a boost to domestic and outbound tourism.”
Overall, the thrust of this budget is on infrastructure development, which is what the tourism industry has always represented to the government. New tourism circuits can only come up if there was adequate development and this budget lays emphasis on it. Finally, giving a boost to the rural economy will also enhance the purchasing power amongst those living in rural areas and this in turn will stimulate travel. We have observed this over the last couple of years.”
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Madhavan Menon, Chairman, Thomas Cook Group
“This time, the Union Budget focused on two aspects: boosting the rural economy and making healthcare accessible and affordable to every Indian. These are steps towards India’s growth and development, aligned with the government’s vision for the country. There is also big push towards increasing the digitization in the country.
“We are heartened to note the focus on rural India – right from boosting the Smart Cities programme to laying down a blueprint for better connectivity through the UDAN scheme. Upgrading India’s Infrastructure by modernizing the railways, airports and roads as well as introducing more airports to connect various parts of the country, are initiatives that will help boost tourism in India. The Budget also indicates a clear commitment to improving rail networks by announcing that all stations with more than 25,000 footfalls will have escalators and trains will be provided with Wi-Fi and CCTV monitoring facilities to ensure safety.”
“However, the one thing that the Budget did not touch upon was the hospitality sector. We were hoping for a rationalization on taxes for hotels in the country. There is a clear shortage of organized hotels in the country and if we want to boost the tourism sector further, it is important to address these issues as well.”
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Rajeev Kale, President & Head -Leisure Travel at Thomas Cook India Ltd.
“While the Union Budget 2018 did not directly address several of the demands being made by the travel and tourism industry, it addressed a pertinent need that acts as a catalyst for growth of this sector – infrastructure. The Finance Minister, Mr. Arun Jaitley emphasized on the government’s vision to improve infrastructure across railways, airports and heritage sites in the country.”
“The Railway capex has been pegged at Rs 1.48 lakh crore, up from Rs 1.31 lakh crore last year. In addition to this, the announcement of initiatives to improve connectivity by developing close to 600 railway stations in India, will give a much-needed boost to domestic tourism. As will the move to connect cities via the successful UDAN scheme. The move to develop 10 prominent sites into iconic tourist attractions is also a move that would lead to boosting of tourism.”
“The National Heritage City Development Augmentation Scheme that has been undertaken to preserve and protect heritage cities in the country will definitely boost inbound tourism as well as domestic tourism in India. These proposals, if implemented, will help in providing impetus to India’s domestic and inbound tourism.”
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Vishal Suri, Managing Director, SOTC Travel
“While the Union Budget 2018 did not directly address several of the demands being made by the travel and tourism industry, it addressed a relatable need that acts as a medium for growth of the infrastructure sector. The budget emphasized on the government’s vision to make 10 prominent tourist sites iconic tourist destinations, with an amalgamation of private funding, marketing and branding giving a much-needed boost to domestic tourism. Right from boosting the Smart Cities programme to laying down a blueprint for better connectivity through the UDAN scheme, modernizing the Railway infrastructure, introducing more airports to connect various parts of the country are initiatives that will contribute towards sustainable growth within the sector.”
“In 2017 the government launched the UDAN scheme which promised to connect tier 2 and 3 cities in India to metros and other key cities. It is encouraging to note that in today’s Union Budget, schemes that would enhance India’s aviation sector were announced. The regional airport development scheme, will connect 56 un-served airports and 31 un-served helipads, and 16 airports are currently under operation. The government has also proposed to increase the airport capacity to handle 1 billion trips a year. Focus on the National Heritage City Development Augmentation Scheme to preserve and protect heritage cities in the country will be a positive move for domestic tourism.”
“Rationalization on taxes to benefit those involved in promoting and delivering travel & tourism services would generate new impulses for tourism. Addressing Issues like tax exemption benefit extended to the NRI Holiday business for tour operators and clarification on the flexibility of transfer and grant of GST credit on hotels would create the necessary boost in the tourism sector further.”
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Dibyanshu, Partner, Khaitan & Co
“The announcement by the Government to connect 56 unserved airports and 31 unserved helipads across the country should provide boost to the civil aviation sector.”
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Aloke Bajpai, co-founder and CEO, ixogo’s
Railways
“Safety has been a major concern for railways over the last 1 year. We are happy to see the government sharpen its focus on the same. Renewal of railway tracks to broad gauge is the need of the hour and hopefully, the government will meet its target of 36,000 km in the upcoming year. Digital connectivity at railway stations will allow for better access to passenger amenities and more opportunities for businesses. This creates immense opportunities for players like us and also for telcos, content providers and others. In order to match with world class infrastructure, station renovation is a must, this will help handle the bustling railway traffic. With the highest ever capital expenditure of Rs 1.48 lakh crore being allocated to the Indian Railways, we believe the government is moving in the right direction.”
Travel and Tourism
“The proposal to develop 10 prominent tourist destinations as iconic retreats is much needed to revive tourist interest, generate revenue and also create more job opportunities locally. Along with this provisions for railways and airlines to modernize stations and expand capacity is the need of the hour if we are to attract more tourists and develop India as a tourism powerhouse to showcase our rich heritage to the world.”
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Amber Dubey, Partner & Head, Aerospace and Defence, KPMG in India
“Encouraging to see the FM talk about increasing airport capacity to handle 1 billion trips per annum from around 180 million currently. KPMG has always believed that India could surprise the world and become the largest aviation market by 2030. It’s fantastic to see that the govt is shifting from short term planning to a long term vision. The focus should now shifts to the execution of this challenging yet achievable vision. Since most of the aviation policy matters have been covered under National Civil Aviation Policy (NCAP 2016), no major policy decisions were expected in the budget.”
“The industry wants jet fuel to be included under GST regime and GST relief for the struggling MRO and General Aviation sectors. These fall under the domain of the GST Council and will be taken up there.”
“The government’s focus on improving infrastructure at leading tourist spots is positive. This will help grow aviation too.”
“Overall a positive budget for aviation, the fight for GST relief on jet fuel, MRO and General Aviation will have to taken up with the GST Council.”
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J.B Singh, President and CEO, InterGlobe Hotels Private Limited
“Overall, the budget points towards a more progressive future. Several initiatives from the infrastructure standpoint will help boost growth and in turn impact tourism positively. Primary among these are the proposed plans of improving intra-city train networks in Bangalore and Mumbai as well as completion of close to 9,000 kilometres of national highways. Additionally, the budget also provides a huge boost to the aviation industry with plans of increasing the number of airports to almost five-fold from the current numbers. This will increase mobility for the entire nation and in turn, provide a major fillip to tourism. On the financial side, reduction in the corporate tax rate to 25% for companies under the 250-crore turnover mark will likely increase re-deployment of capital among SMEs; this in turn should increase travel and further boost hotel and tourism-related growth.”
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Rishi Puri, Vice President, Lords Hotels & Resorts
“Undoubtedly infrastructure development and improving connectivity will help the tourism sector however with no specifics spelled out, we are not exactly sure how it could benefit the hospitality sector. We were hoping to hear from the Finance Minister reforms on taxation which would have made Indian tourism competitive with neighbouring tourism countries. While ease of living has been given importance to, and which is great, ease of doing business remained a dormant subject. This year’s Budget has fallen short of expectations for hospitality.”
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Rohit Vig, Managing Director, StayWell Hospitality Group
“We welcome the budget 2018-19. We are happy that government has announced its plans to convert 10 prominent tourist cities to Tourist Destination. We are hopeful that this move will increase inbound tourism and offers tourists more options. We are pleased to know that the Government is also focusing on better infrastructure in the country and will also indirectly improve the tourism industry of the country”.
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