India’s tourism sector gets much-needed policy boost

Tour companies and guides are eligible for loans, while foreign tourists will be exempted from paying visa fees.

Indian Finance Minister Nirmala Sitharaman has announced a slew of policy measures to help the travel and tourism sector recover from the devastating impact of the pandemic.

For starters, once visa reissuance recommences, the first 500,000 foreign tourists will be exempt from paying visa fees. The incentive will be place until March 31, 2022 or until five lakh tourist visas are issued – whichever is earlier.

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Attracting foreign tourists to India will help the tourism sector revive. Image: Shutterstock/Aleksandar Mijatovic.

The scheme will entail a cost of Rs 100 crore. But it is a small amount relative to economic benefits. Nearly 11 million foreign tourists visited India in 2019 and spent over USD 30 billion (approximately Rs 2,15,000) crore on leisure and business. The average daily stay for a foreign tourist in India is 21 days, with average daily spending per tourist estimated to be USD 34 (approximately Rs 2,500).

To organically strengthen the tourism sector, tour companies and guides have both been earmarked for support initiatives. Under a new loan guarantee scheme for COVID-affected sectors, travel companies/tour operators will be eligible for a working capital loan of up to Rs 10 lakh, while tourist guides licensed at the regional or state level can avail of personal loans up to Rs one lakh. These collateral-free loans will attract no processing charges or foreclosure/prepayment charges. The credit scheme will be administered by the Ministry of Tourism through the National Credit Guarantee Trustee Company (NCGTC).

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A tour guide in action at Ellora caves before the pandemic struck. Guides have suffered over this period, with zero income and the same expenses to meet. Image: Shutterstock/Bob Pool.

Aloke Bajpai, CEO & Director, ixigo, welcomed these policy measures. “The announcement of free tourist visa to first five lakh tourists coming to India by March 31, 2022, is a welcome step. With vaccination drives gathering pace and resumption of activities, we are optimistic normal international flights will resume operations soon.”

FAITH requests further support

The Federation of Associations in Indian Tourism & Hospitality (FAITH), the national agglomeration of travel and hospitality sectors welcomed these relief measures, but, pitched in with requests for additional support. FAITH calls for expansion of the scope of the fee waiver to non-tourist visas well. Additionally, it seeks an extension of the waiver period to coincide with the restoration of pre-pandemic tourist arrivals or until 2024 at the minimum.

While asking for a doubling of eligible loan limits for tour companies and guides and potentially extended into the next quarter, FAITH also requests for them to be converted to a grant. If this is not possible, then it asks for them to be made interest-free.

Apart from seeking modifications on measures announced by the government, the trade association also calls for the withdrawal of tax collected at source (TCS) which it reckons has made booking from Indian travel intermediaries uncompetitive as against those based outside India. More holistically, FAITH also proposes a waiver of central and state government duties, taxes, cess and license fees until the travel and hospitality sector recovers from the pandemic. 

Karnataka pitches in

Meanwhile, the Karnataka state government has announced a 50 per cent reduction in property tax payable by resorts, restaurants, hotels, and amusement parks for the year 2021-22. Applicable excise license fee and additional license fees have also been halved. Moreover, electricity bills for the period of April-June 2021 payable by these establishments related to the tourism sector have also been waived.

As a one-time relief measure, each tourist guide registered with the state government shall also receive a direct cash transfer benefit of Rs 5,000.

With these measures as a starting point, the tourism sector could receive the shot in the arm it so sorely needs.

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