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Wednesday, August 5, 2020

Indian Tourism Industry Seeks Urgent Relief Measures to Avoid an Imminent Collapse

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New Delhi: The apex body of the tourism industry in India, Federation of Associations in Indian Tourism and Hospitality (FAITH) on Thursday, sought immediate “survival” measures to be put in place by the government.

This is an immediate requirement of the industry to save an estimated 3.8crore jobs withing the country and avoid the almost imminent collapse of a 5-lakh crore Indian tourism industry.

The spread of pandemic has completely dried up all sources of revenue for the industry and is expected to stay the same for the current financial year.

FAITH has made some recommendations for some immediate measures to address the cash outflow issues currently faced by the industry.


•             A complete deferment for twelve months of all statutory dues payable by tourism, travel & hospitality industry at the Central Government level, state and municipal government level without attracting any penal interest. These would include GST, Advance Tax payments, PF, ESI, customs duties, excise fees, fixed power & water charges and any fees for licenses and renewal at the state level. 

•             A support fund ‘Tourism COVID 19 Relief fund’ to be set up by RBI or Ministry of Finance or Tourism to support salaries and establishment costs. It should be either in the form of an interest free loan to Tourism companies for repayment of the principle over 10 years. The industry estimates the value of the fund to be minimum of Rs.50,000 crores which is almost equal to gross banking credit to the Indian Tourism industry. 

•             RBI has already provided for three months moratorium on EMIs of principle and interest payments on loans and recalculation of working capital from Financial Institutions. This needs to be without any accrued and accumulated interest during this period and it needs to be extended for twelve months.  

To achieve the above FAITH recommends setting up the National Tourism Task Force of all relevant ministries of the Central Government along with the ministry of tourism and chief secretaries of State governments and industry stakeholders. This should be with legislative powers on the lines of the GST council for state-wise standardized tourism response. 

FAITH has also recommended that once the survival measures have been implemented then the measures for revival of Indian Tourism needs to be put in immediately. The Govt needs to stimulate domestic tourism by giving a 200% weighted reduction of expenses to Indian corporates for undertaking their meeting, conferences, and exhibitions in India. LTA like income tax exemption of upto Rs.1.5 lakhs to Indians for undertaking their holidays with the country, these exemptions to be availed against invoices issued by GST registered Indian Tourism service providers.

To stimulate Tourism exports, SEIS needs to be notified at 10% value for all foreign exchange tourism companies and needs to be maintained at minimum same value for next 5 years and for off-season, it could go upto 15% value. To ensure the revival of Indian travel agent, all refunds, advances and cancellation amounts to be immediately paid back by all airlines, railways and state wildlife parks.

The TCS on travel agent proposed in the finance bill 2020 to be implemented on October 1, should be completely abolished as it puts the Indian travel fraternity at a huge disadvantage of upto 15% v/s their global competitors. Additionally, the service fee for credit card charges needs to below 1% and all corporate travel agent credit cards to be honored. To additionally ensure the survival of Indian tourist transporters, all inter-state levy need to be reduced and standardized. The year 2020-21 can be declared as a GST tax holiday for Indian tourism without stopping the flow of Input tax credits since there will be minimal GST collections from highly reduced travel within India.

FAITH also urges the Government to declare immediate survival measures to prevent mass bankruptcy and crores of unprecedented layoffs. Worldover, countries have already put in support measures for Tourism industry through salary support and tax waiver such as USA, UK, Singapore, Thailand, Australia, Indonesia and many others

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