Tourism industry lauds Budget 2014-15

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Travel Span News Network

As promised in its election manifesto this year, the maiden Union Budget of the new government, presented in the Parliament today by Arun Jaitley, Minister for Finance, Government of India, gave due priority to the tourism sector, with quite a few favourable announcements. Some of them are introduction of E-Visas at nine key airports, Service Tax exemption for inbound tour operators, and development of five tourist circuits.

Subhash Goyal, President, Indian Association of Tour Operators (IATO) said,

This is the best ever budget for the tourism industry in the history of India. We are grateful to the Ministry for considering our long-pending demand for E-Visa. With this, international tourist arrivals to India will grow by 30-40 per cent on a yearly basis and also generate additional employment for 50 million people and substantial increase in Foreign Exchange Earnings (FEEs). A lot of other hopes from the Budget have also been met like streamlining of taxation system, exemption of Service Tax on some services, CENVAT Credit allowed to tour operators, to create five tourist circuits across the country, and to enhance rail connectivity to the North East.

Sarabjit Singh, Vice Chairman, Federation of Associations of Indian Tourism & Hospitality (FAITH) responded – We are delighted to know that the Union Budget has heeded some of our requests like implementation of E-Visa in a phased manner over the next six months, CENVAT Credit for tourist transportation and tour operators, no Service Tax for tour operators earning foreign exchange, etc. While the first step has been taken in this interim budget of mainstreaming tourism, we are going to partner more intensely with the Ministry of Finance for the next budget for incorporating further suggestions. We are now looking at the soon to be announced FTP for further push on tourism. The fine print of Union Budget will reveal more details.

Ankur Bhatia, Executive Director, Bird Group and Member, CII National Committee on Civil Aviation said, This year’s Budget was definitely better than expected from the perspective of the travel and tourism industry. The decision to develop new airports in Tier-I and II cities is a positive for the sector as growth in the aviation sector will come from regional travel, which will add the much needed dimension to the industry. Another positive move for the tourism industry has been the Service Tax exemption for inbound tour operators. Due to Service Tax, Indian packages lose out on account of competitiveness in the sector. Countries that are competing with India, like China, Thailand, Sri Lanka and Singapore, offer competitive prices, which Indian packages fail to offer. With the exemption of the Tax, we would be able to offer competitive rates and packages. This in turn will give a boost to the industry. The decision of introducing E-Visa in a phased manner at nine airports will provide the much expected boost to the tourism sector. A strong focus on regional infrastructure and connectivity will also benefit in bringing investments from foreign airlines as well for generating employment.

Akshay Kumar, President, Adventure Tour Operators Association of India (ATOAI) in his reaction to the budget said, we feel that this is a positive and progressive Budget with due recognition and sops for the tourism industry. ATOAI has been raising key issues at various levels of the government for a few years now. We are happy that finally some of our demands are seeing the light of day.
The fact that Service Tax has been waived off for foreigners travelling to other countries through Indian operators makes us more competitive. Extension of CENVAT Credit for tour operators is also a promising step.

E-Visas is the highlight in this Budget and this alone will remove numerous roadblocks for Inbound Tourism. The rollout needs to be fast and efficient to get immediate benefits. We also feel great that finally the government has recognised Adventure Tourism as one of the key sectors to be developed in Himalayan states. This move will help us in bringing economic benefits to the doorstep of remote communities, which largely remain cut off from government schemes.

On the flip side, we expected more from the Finance Minister by reducing or completely waiving off Service Tax. Also it seems that Tourism is yet not seen as an export industry, and hence still does not enjoy benefits that other export sectors like textiles and software do.

Though development of airstrips in Tier-II and III cities is a good step, ATOAI has been pushing for Greenfield airstrips and air connectivity in the Himalayan regions for a long time, and this has still not seen any progress. Another long-standing demand not addressed in this Budget is the waiver of Excise and Customs Duty on import of adventure travel equipment.

We will keep making presentations and hoping for an even more progressive and Adventure Tourism-friendly Budget in 2015. Overall we think the new government has moved in the right direction with this budget.

According to Naveen Advani, President, Enterprising Travel Agents Association (ETAA), there are definitely many provisions with respect to tourism in the Budget this year, however, these provisions stress on Inbound Tourism. It is, of course, important to promote tourism to India to a great extent, but there is also need to ease Outbound Tourism from India. The Budget has no special incentive for outbound tour operators and tourists.

Peter Kerkar, Director, Cox & Kings responded, the government’s emphasis on travel and tourism in this year’s Budget was on expected lines as the government has shown an intent and willingness to use the sector to promote inclusive growth. The thrust on Pilgrimage and Heritage Tourism with emphasis on Buddhist Tourism circuit centered around Gaya in Bihar, will enable India to attract tourists in this segment from South East Asia, Japan and Sri Lanka. The proposal to earmark a sum of Rs 100 crore to revive Heritage Tourism will lead to development and promotion of new tourism circuits. The proposal to develop five more tourism circuits will enable India to broaden its tourism offerings, which till today is concentrated only on a few circuits.
The move to develop an international convention centre in Goa is welcome as India can then attract huge conventions and conferences that do not consider the country at the moment. This segment does not consider India as an option as we do not have world-class convention facilities. Goa is the ideal venue with its air and rail connectivity and this will encourage more traffic to the destination.

Development of more airports under PPP mode is the need of the hour as India lacks airport infrastructure in Tier-II and III cities. It now depends on how fast the government lays out the roadmap and makes it attractive for private players to bid for such projects.

The proposal to introduce of ETA or E-Visas at nine airports will definitely lead to an increase in Foreign Tourist Arrivals (FTAs), thus increasing FEEs.

According to Pradip Lulla, National General Secretary, TAFI, the Budget is a positive, especially because Modi government has given importance to the tourism industry. Service Tax exemption makes us competitive for our counterparts in foreign countries. Developing of statues also in the long run is pointing to tourism development as across the world tourism is centred on monuments. Besides the initiative to launch E-visa is also appreciable but we expected reduction in ATF and formation of a regulatory board for airlines. Unfortunately that did not happen.

Rajeev Wagle, Managing Director, Kuoni India said, with the proposal statements for the Tourism Industry in the Union Budget of 2014-15, it is a time of positive growth for India’s Tourism sector. The Union Budget’s recognition and commitment to tourism as an important revenue earner and generator of Foreign Exchange for the government is a boost to the tourism industry in general. Proposals such as the scheme for development of new airports at tier II and III cities, focus on development of Archaeological sites as world class tourism spots, introducing E-visas to be issued at Indian airports will facilitate Visas on Arrival, Exemptions from service tax in the case of foreigners travelling with Indian tour operators are steps towards sustainable growth within the sector. The exemption of service tax for broadcast and online advertisements, print advertisements provides numerous opportunities for effective marketing undertaken by Tour Operators and Tourism Boards. This will surely help them tap the potential within the outbound market, while they position and promote their offerings to bring about a definite increase in international travel.