Death of tourism? Indian government failed to recognize the contribution of the industry in economy & job creation
Tourism and hospitality stakeholders in India are in a state of shock with the government’s snub in its economic stimulus package worth 1.7 trillion rupees that was announced last week.
The industry under severe distress had demanded measures like a dedicated interest and collateral-free long-term fund for paying salaries and operating costs besides a complete waiver of fixed central and state statutory and banking liabilities without any penal or compounding interest for a minimum of 12 months to help it weather the crisis.
However, the Indian tourism industry is now looking at large scale bankruptcies and business closures which are expected to result in millions of job losses across the country.
“Imagine 50 million jobs are at risk and there was no relief package or guideline for survival to us. I feel we will see a surge in mass employments and shutdowns in the industry because the road to recovery for tourism will be much longer compared to other sectors. The tourism industry needs to stand together to fight this crisis. Unfortunately, many companies will downsize their operations because of no business and dried cash flow,” said Ravi Gosain, Managing Director, Erco Travels.
As per India Brand Equity Foundation (IBEF), as of 2019, 42 million jobs were created in the tourism sector in India which was 8.1 percent of total employment in the country. Total contribution by travel and tourism sector to India’s GDP is expected to increase from Rs 15,24,000 crore (US$ 234.03 billion) in 2017 to Rs 32,05,000 crore (US$ 492.21 billion) in 2028.
“There has been no mention or support for the tourism industry in the recently announced economic stimulus package. But at least the government should illustrate its viewpoint on the tourism industry in India and the road ahead for it,” said Sunil Gupta, a former CEO of a leading chain of heritage hotels.
Federation of Associations in Indian Tourism & Hospitality (FAITH) in a statement said there is no cash inflow expected for many quarters over FY 20-21 as the key segments of the Indian tourism economy will be down. “The international inbound tourists, inbound and VFR – (visiting friends and relatives) and the outbound travel will remain mostly non-performing due to international flight restrictions,” added the statement.
A section of the industry feels that the government authorities should be approached again with a set of demands for reviving the sector.
“If we have to attract international tourists in the post-pandemic world the government needs to announce no visa fee till December 31, 2021. The government should consider no GST on all elements of inbound tourism including hotels, transport, tour operators and restaurants for the next 18 months. There should be no entrance fees at Archaeological Survey of India (ASI) monuments for foreigners too,” said Arun Anand, Managing Director, Midtown Travels.
Anand also added that there is a need for co-operation of the hotels to maintain current rates until December 31, 2021 and transporters to subsidize the transport cost. “SEIS (Service Export from India Scheme) should continue with 15 percent incentive to tour operators and other banks should give loans on one or two percent interest rates to tour operators till March 31, 2022. We tour operators will have to put up competitive packages to compete with countries in Europe and other parts of the world which are preferred holiday destinations,” he said.
In Independence speech from Red Fort, Prime Minister Narendra Modi urged people to visit 15 domestic tourist destinations in India by 2022 to promote tourism. The travel trade which once was elated by the mention of tourism in Modi’s 5-Ts to build “brand India” is today stumped and introspecting. There are also apprehensions in a section of travel trade whether organizations like FAITH have failed to highlight the cause and challenges of the industry in power corridors.
“It is really dejecting to see that the “Self Reliant India” reform package did not mention the industry which is a key part of the services sector and contributes almost 6-11% to the nation’s GDP. It’s high time now to remind the government that we are equally hit by the Covid-19 pandemic and we too are in need of reforms just like the agriculture, MSME and other sectors,” said Pradeep Pillai, Founder & CEO, Inspiria Hospitality.
Pillai feels that there is a need for a powerful platform that can truly represent the industry. “Firstly, we need to understand that what is the representation of ours as an industry? Are we doing something for the industry or doing everything for ourselves? We need to reform within the sector. One strong platform should represent us not scores of small bodies. Travel and tourism should be represented by the robust leaders and not the people who have no idea what and where are we heading to. I don’t know who is taking the accountability to save the industry, the jobs and the salaries of people,” concluded Pillai.