HOTEL INDUSTRY HOPES FOR TANGIBLE RESOLUTIONS IN FY 2016 - 17

by Shrutee K/DNS

Mumbai: Ahead of the Budget, the Federation of Hotel and Restaurant Associations of India (FHRAI) has appealed to the government to rationalize taxes and amend certain policies for aligning the tourism sector with the rest of the world and give boost to the hospitality industry. In the pre-budget memorandum submitted to the Ministry of Tourism (MOT) and Ministry of Finance (MoF), the association has outlined in details the critical taxations and policy initiatives and recommendations that would provide the hotel industry the much needed stimulus. Some of the key recommendations on taxation include the impact of GST on Tourism Arrivals, availing of Export Promotion Capital Goods Scheme (EPCG) and Service Exports from India Scheme (SEIS) without a Classification mandate, Issuance of Tax-free ‘Hospitality Infrastructure Bonds’.

"The hospitality industry has been at the receiving end for last few years but with the Government’s focus on tourism development things may be turning around for hospitality too. High decibel events and initiatives organised by respective States for promoting tourism and hospitality are indicators of commitment towards these sectors and we feel positive about the future. However, besides campaigns and promotions, the ministries will also have to revisit and remodel some of the prevailing tax structures, laws and policies to bring it at par with competing tourism economies of the world,” says Mr. Bharat Malkani, President, FHRAI & Hotel and Restaurant Association of Western India (HRAWI). “For instance, our neighbouring south-east Asian countries like Thailand and Malaysia have a GST of 7 and 6 per cent respectively. In contrast, GST applicable for hotels in India amounts to a whopping 25 to 30 per cent. Our industry is competing with a difference of roughly 20 per cent while matching with the global service amenities and requirements. Also, we hope that the government considers granting infrastructure status to hotels with a project cost of INR 25 crore as against the present INR 250 crore,” he adds.

"Small and Medium Enterprises (SMEs) are a vital catalyst for employment generation, skill development and innovation in the hospitality sector. It is imperative to facilitate timely and adequate flow of credit for their sustainable growth and expansion. For the purpose of inclusion under the priority lending norms, the categorization of SMEs in the hospitality industry should be delinked from the restrictive criteria stipulated by the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 and instead be based on liberal, industry specific and globally accepted parameters such as number of employees, annual turnover and such quantifiable parameters. A broad spectrum of institutional mechanisms should be made accessible by which the hospitality industry, including our small and medium enterprises, can access lower cost long-term finance,” concludes Mr. Kamlesh Barot, past-President, FHRAI & HRAWI. On policy initiatives, FHRAI has suggested increasing the threshold limit of INR 25,000 to INR 1,00,000 for payments to hotels and restaurants against bills raised and to allow bank loans up to INR 10 crores per unit or borrower extended to hotels and restaurants and be reckoned as 'priority sector lending' within the RBI guidelines.