FAITH For Targeted Tourism Pre-Vaccine Transition Corpus

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FAITH - vaccine status - aviatorsbuzz
Vaccine Status Graphic. Source: Times of India

Federation of Associations on Indian Tourism and Hospitality (FAITH), the collective body of 10 travel trade and trade and hospitality industry associations in the country, has urged the government to set up a targeted tourism transition corpus.

FAITH wants the government to make available funds on a direct benefit transfer through Ministry Of Finance for Indian tourism, travel and hospitality industry, till the vaccine is deployed.

Post Vaccine Recovery

The path to vaccination is becoming clearer now reportedly with multiple vaccines being considered for approval. Reports across the world indicate that by mid-year of 2021 vaccine will hopefully be deployed across most of the international markets and across India too. Tourism will then only see recovery as people will feel safe to travel post vaccination.

Currently barring some spurts of domestic travel during long weekends, almost all segments of tourism are currently non- performing: inbound tourism, corporate travel, meetings and events travel, outbound travel. All these segments will get unlocked post the deployment of the vaccine.

FAITH For Bridge Fund

Faith has thus requested till then a bridge fund targeted at the tourism sector be setup to enable tourism travel and hospitality companies to draw down from this corpus set up by MOF on a direct benefit transfer basis on an interest free which they can utilise to repay their salaries and operating costs till vaccine is fully deployed.

This drawdown by the tourism enterprises may be adjustable over 5 years against their GST and income tax liabilities.

As the recent Q2 GDP data has indicated, the travel hospitality & trade contracted over 15% almost double the GDP contraction of 7.5% for India. On a stand-alone basis, if seen, the contraction in tourism will be much higher.

However, this bridge funding to tourism on an interest free basis will help in correcting that and will open up a path to recovery led through a stable tourism supply.

Enabling Tourism Travel

The drawdown from this corpus will set in motion a virtuous cycle  enabling tourism travel and hospitality companies to keep their business and jobs alive and to be ready for the tourism demand as it begins reviving across international, leisure and corporate markets. The government will lose just the time value of money but will benefit from tax-based growth emerging from this revival.

Globally countries have already started on their second phase of their support to sectors impacted adversely by tourism.

The tourism sector has now seen almost three full quarters of complete distress unlike other sectors and is facing the once in a century crisis of confidence.

FAITH - Kilimanjaro International - aviatorsbuzzAirport
Representational photograph of passengers headed on a holiday boarding a flight. Source: Kilimanjaro International Airport

Earlier, FAITH had mooted the setting up of a National Tourism Council is required since Tourism encompasses multiple ministries and takes place in and within states.  It said the National Tourism Council must be chaired by the PM and co-chaired by the  Tourism Minister and  composed of Chief Ministers of all states and cabinet ministers of Government of India and must be a legislative body on the lines of GST council.

The Concurrent Industry Status, according to FAITH is required for Hotels and tourism across all states as unlike commercial establishments tourism and hospitality doesn’t just retail but creates and produce high quality service.

Power and water utility rates and levies must be at industrial rates effectively. All existing licenses, permits, permissions will be thoroughly examined for redundancies and standardized at a national level. FAITH called for a level playing field in terms of compliances and entry requirements among all sub segments of conventional and alternate tourism organise the travel industry and protect it from fly by night operations.

Export Status, it said is critical to double India’s share of inbound tourism to 2.5% in 5 years. It is key to Treat at par foreign exchange earning members of tourism, travel and hospitality under export and deemed export status to promote forex earnings. It is important to make available the deduction in respect of earnings in convertible foreign exchange to all the tourism and hospitality units earning. Tourism forex earnings should be effectively zero rated for GST.