Tax and infrastructure plague inbound
The Ministry of Tourism (MOT) is taking up many initiatives to boost the arrival of foreign tourists to India, however, inbound tour operators claim that they face many challenges. While the new tax regime remains one of the major issues, the right public
When it comes to challenges in the inbound sector, nothing has changed for a long time. We have the same kind of situation everywhere. There are no new destinations coming up. What we need to do right now is concentrate on the existing destinations, promote them and make them fruitful. The current taxation structure is also a deterrent as there is a lot of confusion within the fraternity regarding the same. As part of IATO, we are trying to resolve the issues of the members, but it will take some time for things to settle down.
Currently, the biggest challenge is the new tax structure, which would make us uncompetitive in the Southeast Asia region. Second concern is the image of the country. From an economic perspective, India is getting better, but from a tourism perspective, things like crimes against women and the border situation are affecting the decisions of people to travel to India. While India remains a potential destination for heritage and culture, there are infrastructural challenges. Apart from that, cleanliness of monuments and the issue of guides also remains a challenge.
Currently, GST is the biggest issue for inbound travel. By levying as much as 28 per cent GST on hotels and 18 per cent on AC restaurants, the government is making India expensive. Thus, India cannot remain a competitive destination for travellers, as it would become around 30 per cent more expensive than others. We were earlier thinking that tourism would be given the same status as export under 5 per cent GST, but that did not happen.
The major challenge currently is GST. We have not been able to send quotations to our agents as we have to get our brochures ready for the upcoming season, which starts in October. We are already late in doing that as usually this is done around AprilMay only. Another major problem is the shortage of promotional budget for India Tourism. This results in decreasing participation in international fairs and the presence of India is not seen at these places. The negative impact of this will be visible in a period of one to two years.
The biggest challenge that the tourism industry is facing today is GST, where 28 per cent tax is being charged on hotels and multiple taxes are being levied on tour operators. This would make India very expensive and we are going to outprice ourselves from our neighbouring countries like Thailand, Malaysia, Singapore and Sri Lanka. If the government is serious on developing tourism, then taxes for the tourism industry should not be more than 5 per cent throughout the board and it should be on value addition only.
The international markets are slow and India’s reputation as an expensive destination and negative publicity of various issues in the country are proving to be a challenge. There is overall economic downturn and an unpleasant image of the country in tourists’ mind. In addition, there are different kinds of taxes, and hence, there is no growth. Tourism department is saying many things, but there is not much happening on ground. Directors of the overseas offices of India Tourism have not been appointed as yet, owing to which one cannot expect much in terms of promotion.