It’s that time of the year again when stakeholders share their speculations, demands, expectations, and recommendations on what they are looking forward to hearing from the government in terms of favourable announcements for the travel and tourism sector. Yes, it’s the Budget season again and as we inch closer to February 1, the date when Union Finance Minister Nirmala Sitharaman will present the Union Budget for 2022-23, we are trying to gauge the mood of the industry on what they think the government should be working towards.
Gaining opinion from the stakeholders of the industry, ETTravelWorld reached out to representatives from different sectors seeking their expectations and recommendations for the upcoming Budget. Read on to understand what they have to say:
Export status to inbound tour business and deeper marketing investment
Madhavan Menon, Managing Director, Thomas Cook India feels that the Union Budget offers the government a significant opportunity to create a stimulus towards revival. “The last two years have highlighted the power of the domestic market and towards unlocking the full potential of domestic tourism, we look forward to budgetary focus on infrastructure development, technology and health-safety across airports/aviation, road, rail, and waterways. India’s waterways offer a large, underleveraged potential that includes sea and river cruising opportunities and cascading employment benefits to the catchment areas. Empowering our global embassies, export (zero-rated) status to the inbound tour business, and deeper marketing investment is much needed to kick start inbound demand and ensure competitive viability when compared to our neighbours in the region. We look forward to the Government’s announcement of granting Industry status, rationalisation of taxes (including a complete GST tax holiday, exemption of TCS levy on overseas holiday packages, and reduction in indirect taxes), removal of SEIS benefit capping of INR 5 crore, and introduction of soft loans with favourable terms as a stimulant to enable the sector to get back on its feet. This will equally harness its force multiplier impact towards GDP contribution, employment generation/ skill development – much needed as the country heads towards recovery, revival, and growth,” he said.
Try out-of-the-box ideas or experiment with initiatives
Sharing an update on the current scenario and expectations from the Budget, Dr Rumki Majumdar, Economist, Deloitte India said that the GDP will grow at historic high rates for two or more years, however, the recovery is likely to be uneven, with spaces like service sector facing structural challenges. “Uncertainty will weigh on the rebound of the services industry – The hospitality, leisure, travel, and entertainment sectors, because of calibrated intermittent regionalised lockdowns. “Support to the travel and hospitality sector should be considered as they significantly contribute to GDP. The government must try a few out-of-the-box ideas or experiment with initiatives followed in the other parts of the world. One such experiment could be of tourism “sandboxes” (followed in Thailand and Indonesia) and invite fully vaccinated foreign tourists to travel a limited area. Improvised service offerings could boost the hospitality sector. The government must look into short-term revival plans as well as long-term plans to address the structural changes these industries are going through and have contingency plans to deal with uncertainties,” she said.
Additional liquidity and interest-free loans
Nishant Pitti, CEO, and Co-Founder, EaseMyTrip stated that the sector needs to be a key priority in the Budget given how significantly it contributes to the economy and employment. “There is more that needs to be done in terms of providing support like additional liquidity, interest-free loans, subsidies, and tax reliefs for industry stakeholders to ensure a faster recovery. We can also look at reviving the travel sentiment by providing travel stimulus packages and tax incentives for personal and corporate travel. There is a huge pent-up travel demand and a reduction in personal income tax rates will place more money in an individual’s hands, which can accelerate the growth of travel. The Budget can also include incentives for states to spend more of their budget on infrastructure and connectivity enhancements that can aid tourism, especially in Tier-2 and 3 cities. Further, the industry is facing huge losses since the pandemic, a tax waiver for the next few years could be explored for a strong resumption of the sector,” he said. Reduce GST from 18 per cent to 5 per cent
Shikhar Aggarwal, Joint MD, BLS International said that to ensure a speedy recovery from the Covid-19 pandemic, a few measures that can be taken under consideration for the revival of the travel and tourism industry, include reduced GST for travel expenses from 18 per cent to 5 per cent, easy process for clearing the GST refunds; tax holidays for at least two years to revive the industry; higher LTA provision to incentive employees to cater more spend on travel; extra investment allowance for the travel industry; and inner-state input tax credit adjustment of GST should be available for two to three years. Furthermore, a travel incentive scheme can be introduced to boost the overall travel industry.
Easier loan facilities for MSMEs and subsidies
Col Manbeer Choudhary, Chairman cum Managing Director, Jewels Group of Hotels mentioned that the industry is looking forward to some relief and support for recovery. “It’s not just large-scale reforms and special packages that the industry is seeking from the budget, but there is also a dire need to consider the timely restrictions imposed every time the pandemic changes its face. Revisiting the GST structure to reduce complexity would be a welcome move. Varied GST for different products and services creates confusion. Reduced GST on services that currently come under high levels would make services more affordable and help in getting better business volumes. Also, easier loan facilities for MSMEs and subsidies would aid the recovering domestic businesses. India has a lot of enriching travel experiences to offer. Promotion of these incredible domestic travel experiences and destinations would help in increasing traction and add new life to the business in domestic travel. This will help the Indian hospitality industry to recover losses and get back on the path to growth,” he said.
Immediate financial aid until demand fully recovers
Poonam Verma, Partner, J Sagar Associates (JSA) shared that the Budget should aim at the current financial needs of the sector which were overlooked last year. “Measures such as reduction of taxes on aviation turbine fuel (ATF), immediate financial aid until the demand fully recovers and financial incentives to the Maintenance, Repair, and Overhaul (MRO) industry should be the highlights. ATF ought to be brought under the GST regime (tax rate capping at 18 per cent) to reduce the costs of Airlines. Secondly, exempt/reduce IGST on the parts (including aircraft components) imported for aircraft MRO to boost MRO business. Incentivise foreign investments in MRO by abolishing the framework of royalties and lease rentals by making it cost-competitive. Keep the focus on boosting passenger traffic and tap the potential of airports by improving regional connectivity through the Regional Connectivity Scheme- UDAN,” she said.