IATO appeals to PM to restore incentives for revival of tourism

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It seeks roll back of TCS of 20 per cent to 5 per cent on Overseas Tour Packages announced in the Union Budget

IATO President Rajiv Mehra has written to Prime Minister Narendra Modi requesting him to restore SEIS (Service Export Incentive Scheme) or introduce an alternative scheme in the new Foreign Trade Policy, as the inbound tourism sector is still suffering and needs hand holding by the government. Besides, it seeks roll back of TCS of 20 per cent to 5 per cent on Overseas Tour Packages announced in the Union Budget. These steps would place the tourism industry at par with foreign tour operators and help them compete with the neighbouring countries. Also, during the current G20 Presidency where promoting tourism is one of the key objectives, it would be pertinent that the Government extends a helping hand to the tourism sector.

In the letter, Mehra has mentioned that the inbound tourism industry of our country was the worst affected due to Covid19 pandemic. Post-revival of international flight operations and tourist visa, only 30-40 per cent of inbound tourism to India has been revived, which the Government accepts. So, either SEIS should be restored or an alternative scheme benefiting the tourism sector should be announced in the Foreign Trade Policy 2023.

It has been stated in the letter that it took nine years to increase foreign exchange earnings to 30.05 billion in 2019 from US$ 14.49 billion in 2010. However, at present, we have gone back to 2004 level, which was 6.17 billion in terms of foreign exchange earnings. This is indicative of the stress this sector is undergoing. According to Mehra, “ We need to compete. But it becomes very difficult as the Govt has withdrawn marketing and promotion support in foreign countries. Ended SEIS, not given any alternative benefit, GST is as high as 20-23 per cent without any input tax credit, whereas neighbouring countries are charging 6-8 percent. To attract tourists, we need to holistically look at all these issues. As regards the argument of revenue loss- it would be made up more than 100 times as it has a positive multiplier impact on the overall economy.” 

He also mentioned that the increase in TCS rate from 5 per cent to 20 per cent w.e.f July 1, 2023, is causing loss to outbound tour operators based in India. The traveller would simply bypass the Indian operator and book outside, it will be a lose-lose situation both for Govt and tour operators. This needs to be brought back to 5 per cent as was before or even lower. The letter states nothing matches the tourism sector in terms of employment generation and contribution it makes in the economic growth of a country. Today the sector needs support and sure the government would favourably consider IATO requests.