FAITH requests NITI Aayog for immediate cash support to distressed tourism employees and enterprises

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FAITH has written to NITI Aayog for immediate support

FAITH mentioned that the tourism industry is going through its worst period ever. Indian Tourism, pre- pandemic, had handled business of almost 11 mn international inbound tourists, almost 17 mn + international visitors’ arrivals, almost 30 bn USD in forex, 2.3 bn + domestic tourism visits & almost 27 mn outbound travellers. All this business has been shut down since March 2020 creating severe financial distress over the past 23 months for the complete Indian Tourism Value Chain of travel agents, hotels, tour operators, tourist transporters, restaurants and other tourism service providers.

For support to tourism enterprises across the country, FAITH has requested for two levels of measures:

Urgent Support Measures
Other Critical Structural Measures

Under Urgent Support Measures, FAITH has asked for the following:

Extend an immediate Direct Wage support to the employees of all the pandemic affected tourism travel & hospitality companies till tourism businesses have recovered. This will ensure a critical social employment cover to such affected employees.

Offer an immediate one-time grant to the tourism travel & hospitality companies whose businesses have been severely affected due to the pandemic to enable them to settle their statutory liabilities, rentals, levies and taxes. This will prevent such affected enterprises from going bankrupt.

Under the new proposed foreign trade policy, create a provision for export credit similar to the earlier SEIS to be made available to tourism industry against their foreign exchange earnings. Post COVID crisis tourism re-building is required and thus it would greatly help if export duty incentive is made available at 10% for both tour operators and hotels category on gross foreign exchange earnings. To provide cash flow support and policy continuity it should be made applicable for the policy period of the FTP 2020-25 with a provision of an additional 500 basis points increase during lean tourism period to stimulate enhanced foreign exchange earnings.

Abolish TCS with immediate effect on outbound trips which was introduced in Union Budget FY 2021-21. This is making Indian Travel Agents & Tour Operators uncompetitive with respect to their global competitors. This additional levy is causing ticketing business from India to be shifted to Travel Agents & Tour Operators based out of the country and is also making Indian Tour Operators & Travel Agents lose vital business in the inter-region travel of South Asia. Once TCS on Outbound Trips is abolished it will enable our Travel Agents & Tour Operators to stage a recovery post the pandemic.

Create a global bidding fund for M.I.C.E sector (meetings, incentives, conferences, exhibitions) of tourism with a minimum corpus for INR 500 crores. This will enable our tourism entrepreneurs to undertake techno economic bids for global events which have a bid cycle of 2 years plus and enable them to target world associations, meetings, Congresses & socio- commercial events all of which have a high economic & employment footprint.

Make available an income tax exemption on travelling within India to make domestic tourism part of mainstream Indian economy. This should ensure that Indian citizens can get income tax credits for upto ₹ 1.5 lakhs when spending with GST registered domestic tour operators, travel agents, hoteliers and transporters anywhere within the country. For quick recovery in the post – COVID era this should also incentive Indian corporates to undertake domestic mice (meetings, incentives, conferences & events) and to prevent Indian mice events from going abroad. This needs to be enabled by offering a 200% weighted income tax expense benefit to Indian companies which are undertaking M.I.C.E events in India. This will not only fast track revival but will also enable Indian domestic tourism which was at almost 2.3 billion domestic tourism visits to grow three to four times in the medium to long term.

Declare hospitality as an infrastructure sector so that long term funds are accessible at suitable interest rates to attract private capital hospitality, to create all India jobs and build quality accommodation supply. This will enable building up of upto 2 million in the medium to long term branded organised hospitality rooms in the country which will require mobilisation of at least INR 5 lakh crores in low-cost long-term funds which will have an enormous economic multiplier across the length and breadth of the country.

Standardise all inter State Road taxes, levies and charges and make them payable at a single point to ensure a truly a seamless tourist transportation experience across the country

Convert the ECLGS scheme extension as a revival tool for tourism, travel & hospitality and not just a debt increase tool by providing for increased moratorium on both principal & interest on all their current and earlier ECLGS disbursements, low interest rates fixed to 1% plus repo rate or an interest rate cap at not more than 5 % and provision for first time borrowers to avail guaranteed funds to pay salaries, taxes and rents and thus protect their enterprises.

Set up a panel to study GST corrections for tourism and make suggestions to the GST council on setoffs, rating corrections and gst law amendment across hospitality, tour operations, restaurants, travel agencies, M.I.C.E. & tourism transportation activities.

Under other critical structural measures, FAITH has recommended the following;

Establish a National Tourism Council chaired by the Hon. PM and co-chaired by the Hon. Tourism Minister composed of Hon. Chief Ministers or Hon. Tourism Ministers of all states. This National Tourism Council needs to be an empowered legislative body on the lines of GST council. This will enable fast track centre – state level tourism decision making and it will create a One India One Tourism approach leveraging and utilising full synergies of India’s tourism potential across all our states.

Tourism, travel & hospitality to be explored to be put on the concurrent list under the Constitution of India as tourism encompasses our national assets and Centre & states need to be aligned to have a synergistic and a coordinated approach in tourism planning and execution.

Urge all states to declare tourism travel & hospitality as a ‘service industry’ to ensure that their utility rates for their enterprises are charged at the lower category of tariffs slabs in line with industries. This will also increase their bankability, and tend to organise this highly fragmented service industry.

Declare Tourism, travel & hospitality as vital export sector to ensure tax deduction in respect of their earnings in convertible foreign exchange and to make their forex businesses zero rated for GST with setoffs available for input duties & levies at state or central level. This will enable the Tourism, travel & hospitality to not only recover the USD 30 bn + it earned pre-pandemic but will also increase it up to 3-5 times over the medium to long term period.

Create an Enhanced Corpus of USD 10000 crores for Global Tourism Branding considering the significant foreign exchange of more than USD 100 bn + generated by tourism over the 5 years pre pandemic. This will enable the Incredible India brand to be rejuvenated globally across both conventional and digital media. It will also help to create structured global awareness of the multiple Indian tourism verticals of MICE, adventure, Heritage, Leisure, Cruise, Weddings, medical etc through segment brand ambassadors & target country wise customised messaging.

Set up an Underwriting Fund for protection of Travel Agents & Tour Operators As has been repeatedly seen in case of collapse of aviation travel agents need to also be protected. A structured mechanism to future secure payments to ensure that we create security for our travel agents & operators’ survival. Travel agents’ payments to principals is unsecured credit and we need to ensure that a form of structured mechanism whether escrow or guarantee or underwriting based mechanisms is in place to ensure that travel agents & tour operators money stays secure. NCGLT under MOF which is administering the emergency credit guarantee fund must be used to set up this underwriting fund.

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