"Tourists don’t know where they’ve been, travelers don’t know where they’re going."
- Paul Theroux

AIRDA NewsDesk

Message of the Month

February 2017

I have recently written an article for the Maharashtra Economic Digest on Tourism, and the economic spin-offs of a vibrant, growing industry. In the article I also presented a focus on the draft National Tourism Policy 2015, prepared by the Ministry of Tourism, Government of India. The centre in partnership with the states is giving high priority to the development of tourism activity in the country.  

The draft policy has been prepared with the suggestion of all stakeholders in the travel, tourism and the hospitality segments. The approach here is comprehensive and radical - covering all niche segments which largely are offshoots of domestic-cum-leisure segment warranting special attention. Other areas include inclusion of tourism in the concurrent list of the constitution to make it a national agenda, review of restrictive / obstructive clauses in current hotel classification guidelines, applicable benefits to hotels to be given to all recognized hospitality segments as timeshare resorts, home stays, etc.

Since this policy is awaiting final approval, it may not be possible to get into detailing at this point in time, but it is pertinent to note that the policy has a focus on domestic tourism which will become a base for attracting inbound tourists.

A policy that could have both immediate and long-term benefits

The draft policy suggests a review of dated legislation, encouragement to non-traditional categories of accommodation such as Home Stays, Tented Accommodation, Compiling Sites, Timeshare Resorts, etc.; classifying hotels and resorts as infrastructure under section 80 1A / 1B of the IT Act; declaring all hospitality projects as industrial sector for the purposes of utility charges & property cess and levy of industrial rates; applicability of lower GST slab for all tourism and hospitality businesses.

It also reflects a growing recognition of tourism's contribution to employment and economic growth, the availability of better infrastructure, focused marketing and promotion efforts, liberalization of air transport, and the growth of online travel portals. Further, increasing intra-regional cooperation and more effective PPPs are seen as key growth drivers for tourism in the next decade.

100% FDI is allowed under the automatic route in tourism and hospitality, subject to applicable regulations and laws.100% FDI is also allowed in tourism construction projects, including the development of hotels, resorts and recreational facilities.

Investment-linked deduction under Section 35 AD of the Income Tax Act is in place for establishing new hotels in the 2-star category and above, across India - thus permitting a 100% deduction in respect of the whole or any expenditure of a capital nature excluding land, goodwill and financial instruments incurred during the year.

Attractive incentives for players

Incentives offered by state governments include subsidized land cost, relaxation in stamp duty, and exemption on sale/lease of land, power tariff incentives, concessional rate of interest on loans, investment subsidies/tax incentives, backward-area subsidies and special incentive packages for mega projects. Incentives are also provided for setting up projects in special areas – the North-East, Jammu & Kashmir, Himachal Pradesh and Uttarakhand.

Incentives from the Ministry of Tourism include assistance in large revenue-generating projects, support to PPPs in infrastructure development such as viability gap funding, and schemes for capacity-building of service providers.

On its part, as the industry voice for India’s timeshare industry, AIRDA has requested the Ministry of Tourism to incentivize domestic leisure-cum-spiritual tourism to leverage the large available market of 1600M.

The future is bright for tourism as an industry, and timeshare as a growing contributor. Just watch this space in the years to come.

B. S. Rathor

Advisor & Member - Executive Committee

The author acknowledges the assistance of WTTC, MOT, MEA, ARDA, AIRDA / KAYBASE reports for the referenced textual and statistic data, without which this article would not be complete. 

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