Businesses are pinning their hopes on Budget 2022.
The ongoing pandemic has upended travel, food, and hospitality businesses. The industry today has nowhere to mourn, except online. Much of the conversation, mostly complaints and concerns, are being shared on Whatsapp groups, webinars, and virtual forums.
The fact is these these sectors are people-driven, and for the business to thrive, people must be present in real, physical spaces and not touchscreens. The food, travel, and hospitality companies are pinning their hopes on the upcoming budget to resolve at least a part of the problem. In an interaction with business leaders, TravelDine captures the voice of the industry.
Travel & Tourism
Madhavan Menon, Managing Director, Thomas Cook India Group, says that the past two years have highlighted the power of the domestic market and unlocking the full potential of domestic tourism.
“We look forward to budgetary focus on infrastructure development, technology and health-safety across airports, aviation, road, rail, and waterways. India’s waterways offer a large under-leveraged potential that includes sea and river cruising opportunities and cascading employment benefits to the catchment areas. Empowering our global embassies, export status to the inbound tour business and deeper marketing investment is much needed to kick start inbound demand and ensure competitive viability when compared to our neighbours in the region,” he says.
He added that an announcement of granting industry status, rationalisation of taxes, removal of SEIS benefit capping of Rs. 5 crore, and introduction of soft loans with favourable terms as a stimulant will enable the sector to get back on its feet. “This will equally harness its force multiplier impact towards GDP contribution, employment generation, skill development, which is the need of the hour as the country heads towards recovery, revival and growth,” says Menon.
Vishal Suri, Managing Director, SOTC Travel, added that the company looks forward to the Union Budget’s consideration of further economic relief for the industry at large.
“Rationalisation of tax structure will help reduce complexities and will enable the industry to focus and accelerate businesses further. Eliminating the Rs 5-crore capping for the SEIS benefit would provide the much-needed impetus to the revival of the tourism industry and promote employment generation,” he says.
He also added that, to boost domestic travel and tourism, incentives should be offered to corporates for organizing meetings and conference in India through partial or full tax exemptions to the corporates on the expenses incurred.
“We seek assistance from the government in enhancing the structural transformation that is needed to build a stronger, more sustainable, and resilient tourism industry. We need to focus on the tourism sector as a sustainable engine for economic growth and development.
“The government should reboot the tourism economy on a stronger, fairer, and more sustainable footing,” he says.
Loveleen Multani Arun, Director, Panache World, says, that a sector that impacts almost 10% of the national GDP needs a boost like never before.
“About 35 million direct and indirect jobs depend on tourism & hospitality. Personally, I fail to see why the industry has always been side-lined. We are hoping that there is a reduction in GST or a GST holiday for the sector. The 5% GST on tourism packages as well as on tourist transportation needs to be rationalised. Further, the 5% TDS is a hindrance not only for the outbound travel industry, which has formidable number of jobs attached to it, but also causes an impediment to inbound travel companies that package destinations like Bhutan, Nepal, Srilanka and Maldives.”
Prahlad Krishnamurti, Chief Business Officer, Cleartrip, said that given the sector has taken a heavy blow, some relief measures like travel and tourism need to be treated at par with the IT sectors.
“This would help quickly revive business and propel the industry towards growth and progress. Although Budget 2021 brought enhancements for public transport infrastructure, we are particularly looking for a proposal that talks specifically about the Indian travel and tourism industry’s short-term and long-term revival,” he says.
The Travel & Tourism industry has been living through a nightmare over the last 22 months. By its own admission in the Rajya Sabha, the Government accepted that 21.5 million people in the industry lost their jobs between April and December 2020 and yet there was no tangible relief; we had no choice but to become “Aatmanirbhar!”
Ajay Prakash, President, Travel Agents Federation of India, says, “Every year, we are asked for our expectations from the Union budget and every year we see our hopes dashed. Given the tribulations of the last 22 months, I hope this year might be different. To ask for a direct benefit is futile. All one can hope for are some measures that could help us survive until restrictions on international travel are eased and business can revive.”
He added that, at a macro level, any measure that puts more purchasing power in the hands of the people would be welcome. “Travel is a discretionary expense and until people can spend with confidence, our industry is going to lag,” he says.
He also stated that at a micro level, the industry is looking at a drastic reduction, if not the abolition, of the pernicious TCS which puts domestic players at a serious disadvantage vis-à-vis, overseas portals.
“A pragmatic scheme to replace the SIES and incentivise forex earnings would be a welcome move, too,” he says.
Srijan Vadhera, General Manager, Conrad Bengaluru, said that the expectations from the upcoming 2022-23 Union Budget are crucial.
“I am personally hoping that government starts initiatives towards measures to boost domestic tourism and support necessary technological developments. We look forward to government initiatives supporting skill development and policies that are growth centric this year,” says Vadhera.
Pradeep Shetty, Sr Vice President, Hotel and Restaurant Association of Western India (HRAWI), added that the government needs to allow domestic travel for individuals and corporates to be a deductible expense in their IT returns.
“We also ask for a review of the decision to introduce LTC cash vouchers in lieu of LTC fare to the Central Government employees. The hospitality industry needs to be granted Infrastructure status and Industry status. The threshold of Rs.200 crore or more has to be brought down to Rs.10 crore per hotel to give a fillip to the budget segment hotels. The government should set up a corpus fund to incentivize all states to align their policies and set off any losses that may occur due to its implementation,” says Shetty.
Gurbaxish Singh Kohli, Vice President, Federation of Hotel & Restaurant Associations of India (FHRAI) stated that the hospitality industry is hanging on by a thread and only a special relief package can reinvigorate the industry.
“FHRAI has asked for a moratorium for loans taken by the tourism and hospitality sector and a special resolution framework for restructuring of the loans along with a moratorium extension of minimum one year for loans availed under ECLGS. Hotels and tourism-related sectors should be included in the National Infrastructure Pipeline (NIP). Emphasis should be on promoting meetings and conferences at hotels in India in view of the massive damages suffered due to COVID19. Allowing Input Tax Credit (ITC) for restaurants is another crucial requirement for the industry. Incentivising domestic travel through tax cuts or by way of tax deductions for a pre-agreed duration, say two to three years, will help promote domestic travel and also retain the outgoing foreign exchange from India,” says Kohli.
Kush Kapoor, CEO, Roseate Hotels & Resorts, says, “Given its critical contribution to India’s economy and its powerful multiplier impact on employment generation, the hospitality industry deserves top priority in the Budget 2022. It would be immensely beneficial for the industry if the finance ministry considers our plea to ease debt regulations for the sector by having banks offer soft loans to finance working capital, incentivise tourism spends by providing income tax concessions, and further ease indirect taxes. We also hope that the government take note of the sector’s role in the entire economic value chain and makes the long-due decision of including travel and tourism in the concurrent list. We are highly anticipating the opening up of international travel early this year. Therefore, the government should set sight on incentivising MICE business,” says Kapoor.
Vineet Verma, Executive Director & CEO, Brigade Hospitality, stated that the impact of the pandemic has been widespread and unfortunately expected to be long lasting.
“While both the Centre and State governments have tried to extend their support to some extent, the sectors need more long-term resuscitation measures to get back on track. Reduction in GST rates to help boost larger spends, according infrastructure status to hotels, lowering interest rates on borrowings, reducing property taxes, partial if not full waiver of other licence fees including Liquor licences, lower power tariff, are some of the boosters that our industry so desperately needs at this point of time,” says Verma.
Food & Beverage
Vimal Sharma, Founder-Director and CEO, SMOOR, said that that the chocolate industry has a huge growth potential.
“A few measures by the government will help the industry. Chocolates currently have a GST of 18%, a reduction of the same to 12% will definitely boost the growth in the category, and it will also benefit the small players with boutique offering. Reduction on import duty of chocolate raw material will help reduce cost. This cost reduction will benefit customers and help the category grow,” says Sharma.
Dharmishtha Goenka, Founder of Praakritik, stated that the government needs to prioritise businesses promoting organic farming and increase the ease of funding in the form of supply chain subsidies, easy certification process and access to working capital for start-ups.
“Organic farming should be given special preference so that farmers are encouraged to undertake chemical-free farming and, as consumers, we can also benefit from it,” says Goenka.
Bharat Malu, Director, Chymey, stated that tax holidays for start-ups with under Rs.20 crore revenue will encourage more entrepreneurs to take the plunge. “A lot of start-ups are now tech-driven or tech-enabled. If we are to host the next big tech revolution and create the next Amazon from India, we should look at forming more technology parks,” says Malu.
Teja Chekuri, Managing Partner, Ironhill India, says that the finance ministry should revise the GST regulations in the hospitality, food and beverages industry.
“We don’t get any input but we have to pay GST for a lot of items we purchase, ranging from 18 to 28%, which directly impacts the margins. This has a domino effect and impacts the customers directly. The reduced margins reflect directly in the increased menu pricing. This impacts customers and, in turn, affects the number of walk-ins,” says Chekuri.
It remains to be seen what the Union Budget 2022-23 has in store for travel, food, and hospitality industry.