Many of the demands from the travel industry echo sentiments from previous years. Will 2024 finally be the year the government takes action and makes changes that match the industry’s evolving needs?
In the fiscal year 2023-24 budget, the Indian government showed its recognition of the immense potential of the travel and tourism sector by allocating INR 24 billion ($290 million).
The tourism sector is expected to contribute approximately 7% to India’s economy, reaching INR 37 trillion ($450 billion) and employing 58 million individuals by 2033, according to the World Travel and Tourism Council (WTTC).
The interim Union Budget for 2024-25 is scheduled for February 1. Here’s what the tourism industry is watching for:
The Visa Power: A key demand on the wishlist is the implementation of visa-free arrival for travelers from India’s top source markets. Drawing inspiration from Asian neighbors like Malaysia, Thailand, and Sri Lanka, which already offer visa-free entry to Indian tourists, this measure is seen as a way to boost foreign tourist arrivals.
MakeMyTrip’s Co-Founder and Group CEO, Rajesh Magow, emphasized that this step would not only enhance India’s competitiveness in the global tourism market but also foster a reciprocal environment.
The call for simplifying the visa process or offering visa-free arrival was echoed by the spokesperson of Radisson Hotel Group.
Spend on Marketing: There’s also the demand for marketing grants to position India as a go-to destination on the global map. Mehul Sharma, founder and CEO of Signum Hotels & Resorts, said, “Even the most exotic destinations need a good PR strategy.”
The Tax Issue: A crucial plea from various travel players, including MakeMyTrip, SOTC Travel, Thomas Cook India, and EaseMyTrip, is to address the recently-implemented travel tax issue. They argue that this disparity provides an unfair advantage to foreign-based entities.
Why The New Tax Is Unfair? Online travel companies operating in India are mandated to collect 20% tax for spends above INR 700,000 by an individual in a financial year on overseas travel including tour packages. In contrast, foreign-based companies do not collect the tax, allowing them to offer lower costs to Indian citizens.
The Solution: The proposal includes streamlining the Tax Collected at Source (TCS) rate on outbound tours. Standardise the TCS rate on outbound tours into a single 5% slab to reduce the significant advantage enjoyed by international competitors, said Vishal Suri, managing director of SOTC Travel.
The streamlining of the TCS structure to a more favorable 5% slab was also highlighted by Nishant Pittie, CEO and co-founder of EaseMyTrip.
Domestic Competition for OTAs: Further demands encompass removing disparities between ecommerce operators and suppliers in the domestic market, specifically regarding taxation on non-AC bus bookings through ecommerce platforms.
Currently, a customer pays 5% tax charge when booking a non-AC bus through an ecommerce platform, which is zero for a direct booking from a bus operator, whether online or offline.
“This is against the spirit of digital India,” Magow said.
Encourage Hotel Investment: Magow also called for rationalizing the goods and services tax (GST) rates and allowing for GST credit for hotel construction in India, which in turn could lead to more affordable hotel stays. “This would not only make accommodations more accessible to tourists but also encourage further investment in the sector and increase India’s organized hotel supply,” he said.
Tax Holidays: Urging for subsidized loans for hotel construction and renovation; the Signum Hotels CEO also called for tax holidays for new projects, especially in less explored regions. Radisson Hotel Group also opined that further rationalization of GST will encourage greater local investments enhancing the global competitiveness of Indian hotels.
Other demands include:
- Reduction of Aviation Turbine Fuel (ATF) tax.
- Addressing overcrowding in popular destinations by encouraging corporations to invest their CSR funds in developing and improving tourist destinations.
- Tax incentives to hotels and homestays for adopting sustainable practices.
- Streamlining the approval process for hotel projects.
- Incentives for adopting digital payment systems.
- Infrastructure development for high growth areas like religious circuits and underleveraged destinations like Lakshwadeep.
Minor Hotels Strengthens India Operations With New Appointment
Gearing up to launch its inaugural Anantara property in Jaipur, Minor Hotels has named Vijay Krishnan-Vazhvelil as the vice president — operations, India. Prior to his current role at Minor Hotels, Vazhvelil held the position of Vice President Operations at Royal Orchid and Regenta Hotels & Resorts, where he oversaw operations across multiple properties in India.
With over two decades of experience in luxury hospitality, wildlife tourism, and experiential travel, Vazhvelil has an extensive background, having worked for the Oberoi Hotels & Resorts, Starwood Hotels & Resorts, American Express Banking Corporation, Hyatt Hotels Corporation, Windsor Golf Hotel & Country Club, and Aramness luxury wildlife lodge in India.
“Vijay’s extensive experience, especially in managing complex luxury hotel and resort operations, will be invaluable as we execute our expansion plans in India,” commented Amir Golbarg, senior vice president — Middle East, Africa and India.