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BUDGET 2014-15 TO BOOST TOURISM

In the Union Budget 2014-15, the Narendra Modi-led Government kept up it’s promise to boost the tourism sector and accorded Rs. 500 crores for the creation of five new tourist circuits in the country. Laying emphasis on the nation’s cultural, historical, religious and natural heritage, Finance Minister Arun Jaitley opined that the sector provides immense potential for development and employment opportunities.

In addition to the new circuits, Sarnath-Gaya-Varanasi Buddhist circuit will be fitted with world class tourist amenities. Jaitley further announced the launching of National Heritage city Development and Augmentation Yojana (HRIDAY), in conjunction with academic institutions and the local community, for the conservation and preservation of heritage characters in cities such as Mathura, Amritsar, Gaya, Kanchipuram, Vellankani and Ajmer on a tourism budget of Rs. 200 crores. Rs. 100 crores has also been allocated for archaeological sites’ maintenance. To boost religious tourism, Jaitley has announced the setting up of national mission on pilgrimage, rejuvenation and spiritual augmentation drive (PRASAD).

Development of new airports in tier I and II cities is also on the cards in a bid to fuel tourism. The airports will be under the public-private partnership (PPP) scheme. Furthermore, the Minister announced that e-visa will be introduced to nine cities across India to encourage inbound tourism.

The industry has welcomed these measures with open arms. Subhash Goyal, President, Indian Association of Tour Operators (IATO), congratulated Jaitley and the Prime Minister Narendra Modi for the best ever budget for the tourism industry in the history of India. According to Goyal, the Budget 2014-15 has announced implementation of E- visa in a phased manner over the next six months available at nine Indian airports, streamlining of taxation system to avoid harassments, exemption of service tax (on some services), CENVAT credit allowed to tour operators, approval GST by end of the year, more focus on Civil Aviation and airports to be developed under PPP model, creation of 5 new tourist circuits, developing Goa as major convention centre with world class facilities based on PPP model, enhancing rail connectivity in North East, cleaning/improvement of Ganga and ghats  and Gaya to become international Buddhist destination among others.

Another association, the Federation of Hotel and Restaurants Association of India (FHRAI) also welcomed the announcement regarding implementation of the ETA/ eVisa policy and the allocation of Rs 500 crore for development of five theme-based tourist circuits.  He also drew the attention of the government for not considering the tax relief for the hotel sector. “We also feel that the Union Budget does not entirely do justice to the Government's own ambitious vision for the tourism sector. In particular, our industry is disappointed that no tax relief or other specific incentives have been proposed for the sector,” S.M. Shervani, President, FHRAI, said.

Shervani opined that hotels and restaurants should have been included in the Negative List for Service Tax, pending introduction of the GST. “The same revenue base is already taxed by way of VAT and luxury tax imposed by state governments and the additional levy of service tax by the Centre clearly amounts to double-taxation. It is FHRAI's view that the relatively meagre tax revenue which the Central Government generates on this account is insignificant compared to the massive economic opportunity which the country is losing in terms of additional employment generation, capital investment and forex earnings, by failing to effectively capitalise on the intrinsic potential of our hospitality and tourism sector,” he added. He applauded the initiative to set up a Rs 10,000 crore fund to provide equity, soft loans and other forms of risk capital for start-up companies.

Commenting on the Budget, Ankur Bhatia, Executive Director, Bird Group and Member, CII National Committee on Civil Aviation, said that the budget for 2014-15 is definitely better than expected from the perspective of travel and tourism industry although the Finance Minister has kept the focus on infrastructure funding, health and education. “The decision by the government to develop new airports in Tier-I and Tier-II Cities is definitely a very positive move for the sector as I see that growth in aviation sector will come from regional travel which will add the much needed dimension to the industry. Another positive move for tourism industry has been the service tax exception for tour operators. Due to the service tax, Indian packages lose out on account of competitiveness in the sector. Countries which are competing with India like China, Thailand, Sri Lanka, Singapore offer competitive prices which Indian packages fail to offer. Now with the exemption of this tax, we would be able to offer competitive rates and packages. This in turn will give a huge boost to this industry,” he added. Bhatia opined that the Cabinet’s decision of introducing Electronic Travel Authorisation (e-Visa) in a phased manner at nine airports will provide the much expected boost to the tourism sector in India.

Rajeev Wagle, Managing Director, Kuoni India stated that, with the proposal statements for the tourism industry in the Union Budget of 2014-15, it is a time of positive growth for India's Tourism sector. “The Union Budget’s recognition and commitment to tourism as an important revenue earner and generator of foreign exchange for the government is a boost to the tourism industry in general,” he opined.

Madhavan Menon, Managing Director, Thomas Cook (India) believes that the pro-tourism strategic vision via the Budget 2014 brings Destination India into the spotlight, creating an immediate window of opportunity for the upcoming inbound season. “The multiplier impact will empower allied businesses connect, both directly and indirectly with the tourism industry and we look forward to swift and effective implementation,” he said.

Jeet Sawhney, MD, Abacus India, also welcomed the Budget. “We are glad to know that government has considered the tourism industry as the core sector for the development and economic growth of the country. Introducing the ETA/ E-Visa at nine key airports in India, proposed with the budget is a positive initiative and we look forward to more such pro-tourism moves. Also, the Tax exemptions by the budget 2014 - 15 will support the growth of our tourism infrastructure, with more Indians enjoying the savings and disposable income for leisure travel,” he said.

Rajesh Magow, Co-founder & CEO-India, MakeMyTrip, considers the Budget progressive. “The development of new airports in Tier I and Tier II cities, through public-private partnership models is a positive and progressive step. This will promote air travel among a large number of Indians and will  enhance leisure and business travel within and outside the country,” Magow said while welcoming the introduction of E-visas facilities at nine airports. According to him, the Rail budget announcement of an outlay of Rs 1000 crore for rail connectivity in North-East region, will expedite tourism-related infrastructure development in the region. “The Government has further demonstrated support for the travel and tourism industry by allocating Rs. 100 crore for development of archaeological sites,” Magow added.

Aloke Bajpai, CEO and Co-Founder, ixigo.com lauded the initiatives under the Budget, stating that the funds committed in the interim budget are steps taken in the right direction to boost the travel sector. “The focus on travel and tourism is further reaffirmed with the Finance Minister announcing Rs. 100 crores towards development of archaeological sites, with Gaya to be developed as a world-class tourism spot, in addition to creating five tourist circuits,” he stated.

Sajid Khan, Country Manager- India, South African Airways lauded the Minister’s proposal to introduce e-visas in a phased manner at nine airports, and complemented the government’s expansion of the visa on arrival scheme announced earlier this year. “Over the last year, the Indian government has made some significant moves to abet the growth of the travel industry. These moves will help create a more robust tourism sector and are welcome moves. Plans to develop more airports through the PPP model, especially in tier II and III cities will also open new avenues of growth for the aviation sector. New airports will not only allow the domestic carriers to tap into newer markets but also help their international counterparts expand their footprint in India by reaching out to tourists in smaller cities through existing or new codeshare agreements,” he added.

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