The Federation of Associations in Indian Tourism & Hospitality (FAITH), the umbrella body of the industry has written a letter to the Prime Minister of India highlighting the devastating economic impact of the COVID 19 pandemic on the tourism industry and seek his intervention in terms of financial relief for the industry to grapple with the situation.
FAITH estimated the Indian tourism industry was looking at pan India bankruptcies, closure of businesses and mass unemployment. It believed that around 70 percent out of a total estimated workforce of 5.5 crores (direct and indirect) could become unemployed (around 3.8 crores). This effect of job losses and layoffs had already begun throughout the country.
A large percentage of total tourism business activity of India, which is estimated at USD 28 billion plus in forex and upwards of INR 2 lakh crores in domestic tourism activity would be at economic risk through the year. Thus, in excess of INR 5 lakh crores of direct tourism industry and almost double that of total economic activity was at risk, according to FAITH.
Some of the key industry asks that are highlighted in the letter to the Indian Prime Minister include:
- Twelve months moratorium on EMIs of principle and interest payments on loans and working capital from Financial Institutions (both banking & non-banking).
- Double working capital limits and on interest free & collateral free terms. This will prevent all our tourism businesses from going bankrupt.
- Deferment for twelve months of all statutory dues whether GST, Advance Tax payments, PF, ESIC, customs duties at the Central Government level or at any state government level the excise fees, levies, taxes, power & water charges, bank guarantees & security deposits and deferment of all renewals, across the tourism, travel, hospitality & aviation industry.
- Set up a support fund for twelve months on the lines of MNREGA to support basic salaries with ‘direct transfer’ to affected tourism employees.
- Deafer introduction of TCS (tax collected at source) on travel that has been proposed in Finance Bill 2020 to be levied from 1st April 2020 as it will displace business from India to overseas, which will lead to shutting down businesses of most Indian tourism companies.
- Deferment of increase in any insurance premium for a period of 12 months such as for example for Standard fire and special perils rate for fire, loss or profits.
- A complete GST Tax Holiday for the Tourism, Travel & Hospitality Industry for a period of twelve months. With almost nil revenues there is hardly going to be any GST collection. This will make a very strong statement and will promote both domestic and inbound travel.
- Grant a 200% weighted exemption for twelve months on expenses to Indian corporates to hold exhibitions, conferences and incentive trips in India. This will be a big shot in the arm and will help revitalise the industry.
- Restoration of 10% duty credit of SEIS scrips to promote foreign exchange earnings. Additionally, to kick start the working capital take the previous year’s foreign exchange earnings as a reference point for credit.
- Regular meeting of a national tourism task force of all relevant ministries of the Central Government along with ministry of tourism and chief secretaries of State governments and industry stakeholders to fast track all tourism investment approvals