Focus on macro benefits
Union Budget evokes mixed response from travel and tourism sector. Stakeholders say while it does offer macro benefits to the industry, it does not give out money into the hands of those in B2B channel.
ASSOCIATIONS
We are disappointed with the Union Budget 2022-23. We were expecting some relief for inbound tourism, which was without work for the last two years, and hence were expecting that Prime Minister Narendra Modi, who supports tourism industry, will do something for us. But nothing has happened except ECLGS extension, which is no good for small or medium tour operators. If we do not have the money, what will we do with loans! That is why, we were asking for grants, which, if we survive and do well, the government can get back in the form of taxes.
The only thing that I can see that is positive for the industry is the extension of the ECLG Scheme and the infusion of the additional ` 50,000 crore, which is hopefully allocated specifically for the hospitality and related industries. But in terms of taxation, the TCS was something that all associations had brought up repeatedly. We had even discussed this with the MoT. That finds no mention at all in the Budget. There could be certain indirect spin-offs in terms of development of the North East or e-passports. But these do nothing for the travel trade. It is disappointing. The government has really not been able to understand the value of, or to capitalise on the potential of this tourism industry.
I have always been advocating at various forums in the past that connectivity and development of infrastructure are the most important keys to success for tourism to grow in India. I am glad to note the government is working aggressively towards developing the highways, railways, metros and ropeways, which indirectly will boost tourism in the times to come. Better connectivity and an improved infrastructure in future will provide a much better experience to the travellers. However, nothing more is there in the budget for the hospitality sector, which has been suffering the most for the last two years, as only the ECLGS’s time period and the allocation has been increased, which unfortunately is not going to help much to the sufferers in our tourism industry.
Having seen the budget, it is disappointing for the hospitality and tourism industries that the government does not recognise the importance of tourism. We talk about culture and heritage without realising the importance of financial support. Since the tourism industry has been severely affected, we were looking for government assistance. However, knowing that inbound tourism is not going to start until a while, the only hope we had was the announcement of financial assistance in the Budget. There is a serious physical stimulus needed, since 40 per cent of the tourism industry has suffered. And if financial support is not provided by the government, another 40 per cent of the industry will disappear in next two years. The budget has given little support to the sector.
It is a good budget in terms of overall economic growth, especially with respect to infrastructure and government capex allocation. It is a growthoriented budget, but I am disappointed that no specific measures have been announced to revive the travel and tourism sector. We were hoping for some GST relief measures (a temporary waiver or reduction) to aid the recovery for travel companies. The recent introduction of TCS also distorts the competitive landscape and makes it favourable for the foreign travel companies, which do not have to abide by these rules, thus making an uneven playing field. It is important that this is reconsidered and some relief measures are implemented to promote inclusive growth of our industry.
Given the massive damages that decimated the entire sector’s ecosystem, these measures (in the budget) are not adequate to bridge the losses and offer impetus to the hospitality and tourism industry. The number of meetings we held with the Union Finance Ministry and other ministries led us to believe that they were surely going to announce some sort of specific relief for the industry, but it is a disappointment that it has not come through. We had requested the FM to allow domestic travel for individuals and corporates to be a deductible expense in their IT returns, inclusion of hotels and tourism related sectors in the National Infrastructure Pipeline (NIP), infrastructure and industry status for the hospitality industry and allowing input tax credit (ITC) for restaurants.
It is the same as last year's budget for the tourism industry. There is nothing to cheer about since we had hoped to reap some direct benefits from the industry. It varies by vertical within tourism. However, there is still a large portion of people connected with inbound tourism, the operators, guides and transport operators, who are still seeking help and business. We were looking for direct grants in addition to the loans to be able to survive, as inbound tourism is still a far-off dream with no regular flights yet available and the seven-night quarantine is a big disruption for us. Many of our demands have not been met. There are some transportationrelated developments that are good for the national tourism, but for us survival and revival are essential.
There have been many things in the Union Budget 2022-23, which can be applauded. Easing of international travel with the introduction of e-passports with embedded chips and the extension of Emergency Credit Line Guarantee Scheme (ECLGS) to 2023 with its guarantee cover expanded by ` 50,000 crore to total cover of ` 5 lakh crore is expected to bring further respite for the tourism and hospitality sector, especially the smaller players. There could have been further provisions (direct tax breaks, etc) to limit the impact on the tourism industry that has faced hardships due to the pandemic for a long time. We believe continued inoculation and easing of lockdowns will help travellers to venture out. Strengthening Insolvency and Bankruptcy Code is also a welcome move.
We are disappointed with the budget. For the last three years, there has been no relief given to us. The tourism industry has been bleeding. It contributed about 10 per cent of the GDP and about 30 billion dollars in 2019. The need of his country is to tackle unemployment and help us revive the industry. At least one or two good things have happened. ECLGS has been extended till the end of 2023 and other benefits such as linking of rivers, starting of ropeways, are meaningless because they are not going to give us any immediate relief. Hence, we again appeal to the MOT, Health Ministry, Home Ministry and the Civil Aviation Ministry to restart scheduled international flights, reactivate tourist visas and remove restriction of quarantine on passengers with double vaccination.
The Union Budget is in the right direction with adequate pushes in infrastructure extension of highways by 25,000 KMs in FY23, in introducing services such as 400 Vande Bharat Trains. Extension of ECLGS till March 2023 is a welcome move and a much-needed booster for the aviation and hospitality sectors. Implementation of these schemes will definitely see the three pillars of Incredible India – Infrastructure, Access and Ease of Business – strengthened. Aviation has been overlooked and this being a sector which was equally and as badly hit by the pandemic. The TCS issue is still unresolved. The industry had hoped the free five lakh ETVoA scheme was carried forward. This with the restoration of LTA/ LTC scheme would work for both aviation and tourism.
We welcome the move to sanction additional ` 50,000 crore exclusively for the hotel industry as ECLGS loan to tide over the liquidity crisis. But this is another loan which cannot be considered as relief. The moratorium period of one more year, which is extended till March 2023, is not adequate and it needs to be extended up to March 2025 to overcome the loss, which the industry has incurred in last two years. The addition of eight ropeway projects is good news and we do hope something is there for Odisha. The additional ` 1,500 crore for the North Eastern Council on the lines of Gati Shakti is definitely welcome. Although there is a marginal hike in the allocation for the tourism ministry, it is not at all adequate.
Unfortunately tourism industry was once again sidelined in the Union Budget 2022-23 as no direct benefit was passed on to it. The extension of ECLGS through 2023 is a welcome step and allocation of additional ` 50,000 crore dedicated to tourism will bring in some relief for the industry. The announcements regarding multi modal transport for convenient travel, introduction of new Vande Bharat trains, detailed projects of five river systems and the eight ropeways and integrated connectivity between train stations and expansion of 25,000 kms of highways in the country is a thrust on creating a tourism ecosystem for long-term growth. Epassport will place India among the developed nations. The renewed thrust on the North-East will also boost tourism.
When it comes to inbound tour operators, it is a disappointing situation. ECLGS has a narrow spread for tour operators, and it does not help small and medium operators, who have never applied for a loan before. The various schemes on infrastructure and expenditures are welcomed, but they will have a long-term or medium-term impact on tourism. What we were looking for was some direct intervention in this industry. COVID has severely impacted the inbound tour operators, who have closed their offices for the last two years and have expenses to meet with no revenue. So, we were looking for some direct reliefs, which, if the government wanted, could have worked out based on the GST paid by us. We were expecting a bit of attention to tourism.
If you look at the Economic Survey released a day prior to the Budget, it admits that hospitality sector is in the worst possible state and hasn’t recovered yet. The government in Goa has given us interest concession for last year for up to six month of up to five per cent, which is good. Moreover, for charter landings in Goa, they have given landing fee concession of up to one lakh, which also needs to continue. Our main concern was on the ease of doing business in Goa, for which the government is now offering five-year licence for excise and tourism. Even for M!CE in Goa, there are multiple permissions that are required and we have requested the government to have one-window system in actual sense on the lines of film shoots. So, it was difficult for the trade to cope with the domestic market.
The industry has lost two business seasons in a row. Although the allocation to tourism budget has been increased, looking at the challenges faced by industry the increase in inadequate. About 60 per cent increase in tourism infrastructure budget is a welcome initiative, but the Budget has seen a drastic reduction in tourism promotion budget from
` 668 crore to ` 416 crore, which is likely to impact the Incredible India campaign. After the impact of pandemic lessened, tourism will be driven majorly by domestic tourism and international travel will commence in due course. The Budget has provided quite a lot of indirect boost to the sector with plans for national highways, 400 energy-efficient trains, ropeway development and e-passports that will indirectly promote tourism.
TECHNOLOGY
Extension of Emergency Credit Line Scheme till 2023 is a welcome move but not enough to sustain the SMEs and MSMEs in these times, which need financial support through waivers or moratorium of loans and interest. On a brighter side, Gati Shakti Scheme is a stupendous move to boost the tourism, along with the launch of e-passport having embedded chip, which is going to be influential in ease of international tourism, and will bring the experiential change for the traveller. Digital payment facilitation to digital currency launch using block chain or other in-house developed technologies is a level-up approach for rising Indian economy through #MakeinIndia solutions.
International travel has been severely impacted by the pandemic, which is why we are pleased with the introduction of e-passports with embedded chips in the Union Budget for the Financial Year 2022-23, which was announced by Finance Minister Nirmala Sitharaman. This will provide a big boost to travel and add a level of convenience for international travellers from the country. Additionally, the expansion of the Emergency Credit Line Guarantee Scheme (ECLGS) by ` 50,000 crore to ` 5 Lakh crore will enable the small travel operators and stakeholders within the travel and tourism industry to reel back from the disruptive impact of the pandemic, which has taken a toll on the industry in the last couple of years. E-passports will give boost to the ailing tourism industry.
AGENTS
The industry has somehow tried to survive itself for the last two years, but now for revival, the government did not support us at all. We didn't get any functional support from the government. We didn’t ask for monetary support, but we needed support in terms of GST or tax. Even the credit line, which the government has extended, has to be returned and will not go in our pockets. The government should have thought a little bit about the employment that we generate. While inbound (tourism) is recognised by the government for generating foreign exchange with 30 to 35 million people travelling abroad, even outbound creates a lot of job, inventory and generate taxes for the government. The tourism industry generates 9 to 10 per cent of India’s GDP.
The Union Budget 2022-23 reflected a development and investment orientation, with much needed emphasis on infrastructure, technology, skill development and health. From a travel & tourism perspective however, the Union Budget has been disappointing. The Budget made no reference to the industry’s recommendations to aid revival, including rationalisation of taxes (a complete GST holiday, exemption of TCS on outbound tours, reduction in indirect taxes), removal of SEIS benefit capping of
` 5 crore. For a sector that is a key contributor to the country’s GDP and brings in valuable foreign exchange earnings, with a force multiplier impact on jobs and skill development, a stimulus would have supported the country’s road to recovery.
The Union Budget presented by Union Finance Minister provides the much needed positivity with focus on infrastructural development, digital enhancements, and healthcare. While, the Prime Minister’s PM Gati Shakti plan focusing on roads (25,000 km additional national highway), railways (2,000 km new railway network by 2023), airports, ports, waterways as these modern infra developments will raise productivity and be the key drivers of domestic tourism economy. Additionally, the Parvat Mala announcement with 8 National Ropeways development project will ease commuting and thereby improve connectivity. The two noteworthy announcements of issuance of e-passports and the expansion of the ECLGS will help boost the industry.
While the Union Budget 2022-23 offered significant initiatives and outlay pertaining to infrastructure development, technology, health, education and skill development, we are disappointed that the travel & tourism sector saw limited attention. The recommendations put forward by our industry to support recovery did not receive mention – including tax rationalisation, GST holiday, exemption of TCS on outbound tours, reduction in indirect taxes, removal of SEIS benefit capping of ` 5 cr. The Union Budget’s focus on expansion and modernisation of transport infrastructure, leveraging the PM Gati Shakti master plan, is a welcome move in unlocking the full potential of domestic tourism that has played a mission-critical role over the last 2 years.
India is currently the thirdlargest start-up ecosystem in the world. Extension of tax incentives of start-ups will provide additional support to the industry and will help them recover from the losses and hardships faced during the pandemic. Ease of doing business 2.0 will empower upcoming entrepreneurs and give rise to a new generation of founders. We also welcome the tax incentives for startups until March 31, 2023. Startups are the backbone of a thriving economy and we are glad that the government is focused towards prioritising this sector. Digital learning and upskilling policies announced will address the industry-academia widening gap and nurture entrepreneurship at the grassroots level. International travel is likely to recover soon despite it being slowed by Omicron.
HOTELS
Overall the Budget 2022 is a positive & balanced budget, which is committed to inclusive growth of the overall economy while focusing on key sectors such as agriculture, infrastructure & women development. We are happy with the announcement regarding the extension of ECLGS up to March 2023 and increase in guarantee cover to
` 5 lakh crore is a welcome step that will bring a lot of relief to the battered hospitality sector and pent up demand post COVID. The announcement regarding National Ropeways Development Programme to be taken up in PPP mode will not only improve the connectivity but will also give impetus to travel and tourism sector. Secondly, the Budget has given a boost to the railway & infrastructure sector.
The hospitality industry has been severely battered by three consecutive COVID-19 induced waves over the last two years. The extension of Emergency Credit Line Guarantee Scheme (ECLGS) moratorium by one year for the hospitality sector will come as a breather for the hotel industry players grappling with burden of loan repayment and uncertainties in revenue generation. The move will bolster the much-needed liquidity to the sector, which employs a large number of people across the country. It is appreciated that despite the revenue constraints faced by the government and its impact on the widening fiscal deficit, the government has taken cognisance of the strain that the hospitality sector is going through. This will help the hospitality sector tide over the cash crunch and working capital issue.
The budget seems to recognise the importance of hospitality industry. The announcement of the extension of ECLGS is a good move for the industry. The fact that the FM has gone ahead with more allocation for our industry will definitely go a long way to propel growth. We operate in the different tiers and understand how the last two years have impacted the overall industry. It will help in a big way, especially mid-sized hotels from the liquidity standpoint. The budget has emphasised growth aspects, both infra and sustainability. Overall the steps will certainly boost the tourism and hospitality sector. The announcement of Parvat Mala having eight ropeway projects will not only reduce congestion in hilly regions, but also boost tourism development. FM also informed about 400 Vande Bharat trains.
We, at the Radisson Hotel Group, welcome the budgetary announcements made by Union Minister of Finance Nirmala Sitharaman while presenting the Union Budget for the year 202223 in the Lok Sabha. The minister proposed strategic financial assistance to enable the speedy recovery of the hospitality sector in the country. The extension of the Emergency Credit Line Guarantee Scheme (ECLGS) with an increased cover of as many as ` 5 lakh crore till March 2023 for the hospitality sector has been seen as a positive move by the Union Finance Ministry. With domestic travel in the entire country picking up pace, we believe that the highway expansion plans across the country by the central government would further facilitate accessibility and strengthen this demand further.