Union Finance Minister Nirmala Sitharaman tabled the Central government’s Budget for 2022-2023 in Parliament at 11 am today. The tourism and hospitality sectors had high expectations from the Union Budget this time, however, the government didn’t heed to their key demands of industry status, abolishment of TCS on outbound travel and tax concessions.
The budget announced an extension of the Emergency Credit Line Guarantee Scheme (ECLGS) till 2023 with an additional corpus of ₹ 50000 crore dedicated to hospitality and allied industries. Launched as a special scheme in view of the Covid-19 crisis, ECLGS provides 100 percent guarantee coverage to banks and NBFCs to enable them to extend emergency credit facilities to business enterprises in view of the pandemic so that their additional working capital requirements are fulfilled.
The announcements around PM Gati Shakti for multimodal transport, plan for seamless travel, plan for 400 new Vande Bharat, 5 planned DPR of river systems, 8 new ropeways under Parvart Mala, integrated connectivity between railways station, e-passports, PM North-East infrastructure, digital rupee, 1 lakh crore additional interest-free support will have medium to long term growth implications for tourism growth in India.
Industry Reactions:
Nakul Anand, Chairman, Federation of Associations in Indian Tourism & Hospitality (FAITH)
The Union Budget provides some relief and medium to long-term infrastructure measures to stressed tourism travel & hospitality industry, but there was an immediate opportunity for more direct intervention to support the highly stressed tourism travel and hospitality companies and their employees.
KB Kachru, Vice President, Hotel Association of India (HAI)
The extension of ECLGS and additional corpus dedicated to the hospitality sector is a good step. It will help a section of stakeholders. However, we are at a stage when we expect handholding from the government. The budget offered a good opportunity to roll out policy changes like announcing industry status to the sector. In all of our deliberations with the policymakers, the importance of our sector in job creation and GDP growth has been recognized. However, it is an irony that we are still considered as an ‘elite’ sector.
Jyoti Mayal, President, Travel Agents Association of India (TAAI)
Our trade has suffered tremendously due to the pandemic and it was expected that the Government would at least work towards positive upliftment of the travel and tourism in India, which they always portray as a priority. TCS which has been a hindrance to the growth of outbound tourism making Indian tour operators less competitive in the international market due to the 5% tax being levied on all package tours over and above GST still remains. We were also expecting that the tourism sector will be brought under the concurrent list for industry status.
Naveen Kundu, Managing Director, EbixCash Travel Services – India, South East Asia & Middle East
We can’t just view this budget from the lenses of the tourism sector. I will look at it as an overall budget. In an overall budget, there is a direct benefit to tourism and there is an indirect benefit to the sector. The direct benefit is in form of ECGLS extension with an additional corpus of ₹ 50000 crore. It is a great step in terms of creating and restructuring loans for the hospitality sector. There are a lot of other benefits like the impetus on the infrastructure sector. This will help both domestic and inbound tourism to grow. This budget is very capital intensive. Just imagine the amount of capital that will flow into the capital goods industry and the manufacturing industry. Such investments in new projects will also fuel the demand for travel. Overall, I think this is a fantastic budget with a focus on every vertical of the economy. Saying so, we also expected the government to announce the industry status for the tourism sector. The government could have also considered declaring 2022 as a Visit India year, offering free visas to the inbound tourists. Such a move would have benefited inbound tourism to a great extent.
Madhavan Menon – Managing Director, Thomas Cook (India) Limited
The Union Budget 2022-23 reflected the development and investment orientation, with much-needed emphasis on infrastructure, technology, skill development and health. From a travel and tourism perspective, however, the Union Budget has been disappointing. The budget made no reference to the industry’s recommendations to aid revival, including rationalization of taxes (a complete GST holiday, exemption of TCS on outbound tours, reduction in indirect taxes) and removal of SIES benefit capping of Rs 5 crore.
Shamsher Dewan, Vice President & Group Head – Corporate Ratings, ICRA Limited
The industry has been affected by the pandemic-related lockdowns/restrictions on mobility by various states and increased wariness to travel. The industry has been a key beneficiary of the RBI’s moratorium and the ECLGS scheme provided as part of the pandemic relief since March 2020. The extension of the ECLGS scheme benefits up to March 2023 and expansion of guarantee cover will be expanded by Rs. 50,000 crore to a total cover of Rs. 5 lakh crore, with the additional amount being earmarked exclusively for the hospitality and related enterprises, is a positive for the sector.
Vishal Suri, Managing Director, SOTC Travel
The PM Gati Shakti plan focusing on roads (25,000kms additional national highway), railways (2000km new railway network by 2023), airports, ports and waterways will be the key drivers of the domestic tourism economy. Additionally, the Parvat Mala announcement with 8 National Ropeways development projects will ease commuting and thereby improve connectivity. The two noteworthy announcements of issuance of e-passports and the expansion of the ECLGS scheme for the hospitality sector will help boost the travel and tourism industry. However, this Union Budget did not provide the travel and tourism industry the respite we anticipated with respect to rationalization of taxes, reducing/eliminating the TCS on outbound travel, and elimination of the Rs 5 crore capping for the SEIS benefit. We also hoped this budget would offer incentives to corporates for organizing meetings and conferences in India through partial or full tax exemptions.
Dr. Subhash Goyal, President, Confederation of Tourism Professionals
The Tourism industry was expecting some relief to be announced in this budget but we are really disappointed. The Government should understand that tourism is the largest employment generator and has been contributing 9-10% to India’s GDP and about US$ 30 billion in foreign exchange earnings. While ECLGS extension till 2023 and guarantee cover extended to Rs. 5 Lakh crore is a welcome step but it will not solve the immediate problem of survival, unemployment and bleeding of the sector.
Zubin Saxena, Managing Director and Vice President Operations, South Asia – Radisson Hotel Group
We welcome the Union Budget and the allocation of strategic aid that will enable the speedy recovery of the hospitality sector. The extension of the Emergency Credit Line Guarantee Scheme (ECLGS) with an increased cover of Rs. 5 lakh crores for the hospitality sector is a positive move. With domestic travel picking pace, we believe that the government’s highway expansion plans will facilitate accessibility and strengthen this demand further.
Sarbendra Sarkar, Founder, Cygnett Hotels and Resorts
The extension of ECLGS scheme with an additional allocation for the hospitality sector is a welcome move. As we all are aware the hospitality sector has been one of the hardest-hit sectors because of the pandemic. This will help the small and mid-sized hotels to overcome liquidity issues and to return to growth. The big focus on infrastructure development will also help the tourism and hospitality sector. We also welcome the announcement of the National Ropeways Development Programme.
Ritesh Agarwal, Founder & Group CEO, OYO
The budget, presented by Finance Minister Nirmala Sitharaman, is progressive and growth-oriented. I see it in three words – innovation, inclusivity and infrastructure. It will help in India’s progress towards its aspiration of a $ 5 trillion economy. The focus on start-ups, which have emerged as drivers of growth for our economy, was evident. The extension of the incorporation period for eligible start-ups will certainly give a boost to this segment. Hospitality services by the small & medium sector are yet to bounce back, and the Finance Minister’s decision to extend the ECGL service for this sector up to March 2023 expanding the cover by ₹50,000 cr is a welcome move. Steps such as e-passport issuance will strengthen overseas travel and expansion of highway network by 25000km and contracts of 8 ropeways under PM Gati Shakti to develop seven engines will also benefit domestic travel.
Sonica Malhotra Kandhari, Joint Managing Director, MBD Group
Overall, the Budget 2022-2023 is a positive and balanced budget that is committed to the inclusive growth of the overall economy. We are happy with the announcement regarding the extension of ECLGS up to March 2023 and an increase in guarantee cover to Rs. 5 lakh crore. This will bring a lot of relief to the battered hospitality sector and pent-up demand post-pandemic. The announcement regarding National Ropeways Development Programme to be taken up in PPP mode will not only improve the connectivity but will also give impetus to the travel and tourism sector. Secondly, the budget has given a boost to the railway and infrastructure sector with the plan to develop 400 new generation Vande Bharat trains and expansion of national highway network by 25,000 km by 2022-23 under the Gati Shakti plan. This is a welcome step that would lead to the new growth trajectory of the economy and will lead to more job opportunities for the youth.
Ronojoy Dutta, Whole Time Director and Chief Executive Officer, IndiGo
The budget appears to be a growth-oriented one by an increase in the capital outlay of Rs. 7.5 Lakh crores, fiscal deficit capped at 6.4% and efforts are being made to reduce compliance burdens and improve ease of doing business. We expected the budget would enable India to achieve a growth estimate of 9.2%. We welcome the new incentives of issuing of E-passport and the introduction of digital currency. The government’s relentless focus on national transportation infrastructure development with the PM Gatti Shakti plan will strengthen the much-needed multimodal connectivity and facilitate seamless movement of cargo, while reducing logistics costs. Having said that we were expecting tax concession to the aviation industry in the forms of a cut in ATF excise duty and allocation of concessional finance to airlines to help us come out of the pandemic.
TBO.Com’s spokesperson
The launch of the issuance of e-passport with embedded chips is a welcome move for travel and tourism industry as it would ease international travel facilitating more people to travel abroad. In addition, the introduction of 400 Vande Bharat trains in the next three years is expected to assist in augmenting online train booking in the coming years.
Aloke Bajpai, Group CEO & Co-founder, ixigo
The introduction of innovative initiatives like e-passports will boost security and will enhance the convenience of international travellers by cutting down long queues at immigration counters. This will help support a faster revival of international travel in a pandemic-driven environment. Extension of ECLGS will also provide additional support to the hospitality industry which has borne the maximum brunt of the pandemic. The current budget’s focus on modernizing infrastructure and expansion of highways under PM Gati Shakti will give impetus to intercity mobility by connecting major economic hubs and saving travel time for people.
Poonam Verma, Partner, J. Sagar Associates (JSA)
Ahead of Union Budget, the Indian aviation sector was hoping for direct fiscal support. Contrary to the hopes and expectations, no such financial support to the sector was proposed in the Union Budget 2022-23. Though budget allocation for the aviation sector has been enhanced from last year (i.e., from Rs. 3,224 to Rs 10,667 crore), it does not really provide any immediate relief to the struggling aviation sector. Union Budget 2022-23 fails to address any of the current financial needs of the sector which have clearly been overlooked. Strong government support at this stage could have played a pivotal role in firmly entrenching the nascent signs of recovery being currently seen in the sector for the last couple of months. An increase in ATF prices is a further blow to the industry.
Kanika Tekriwal, CEO & Founder, JetSetGo Aviation
The introduction of E-passports will bring more convenience to the public as well as to the authorities. We expect that the embedded chip and the futuristic technology used in e-passports will ensure easy verification and readability of the personal information including the biographical details visible on the passport and will encourage a hassle-free journey.
Chirag Agarwal, Co-Founder, TravClan
Being a B2B travel tech Startup, we are happy to see that the ministry has prioritised our needs and has extended the tax incentive until March 2023. This is a much-needed relief for new businesses such as ours to sustain and it will also help a lot of new start-ups to take off. From a travel perspective, since travel agents are considered our primary partners, we welcome the much-deserved loans that are being introduced to give this sector some relief. The pandemic has been tough on the industry and this decision will not only aid our business but will also impact the entire industry on the whole.
Aditya Sanghi, Co-Founder, Hotelogix
The Indian hotel industry has taken a hit of over ₹1.30 lakh crore in revenue during the fiscal year 2020-21. The hospitality industry generates employment for close to 4.5 crore people in India and so we welcome the decision taken by the government to extend the ECGL service towards the hospitality industry but this may not be enough. We were looking forward to seeing some GST relief in the budget for the sector. Being a hospitality start-up, we also welcome the tax incentives for start-ups until March 31, 2023. Start-ups are the backbone of a thriving economy and we are glad that the government is focused on prioritising this sector.
Pranav Dangi, Founder, Hosteller
The FM has announced a forward-looking budget with an impact horizon of 3-4 years. Already struggling travel sector has still not come to pre Covid levels and hence a boost to small players in the sector through the extension of ECLG scheme to 5 lakh crore will help the small operators stay afloat and in turn keep the industry’s base strong and intact.
Vasudha Sondhi, MD, OMPL Group
The budget overall is an in-depth one looking at spurring economic growth for overall benefit. With reference to the tourism industry, while the budget talks about a 20000 crores outlay, it is not clear on its allocation. The budget has ignored completely some key aspects that are hurting the industry like wage support, and revival of inbound tourism, TCS issue of outbound travel agencies. Further, when so much is being said about domestic travel the least they could have done was to offer tax benefits to domestic travellers and companies doing large MICE events in India.
Col. Manbeer Choudhary, Chairman cum Managing Director, Jewels Group of Hotels
By announcements made for the hospitality industry in Union Budget 2022, the government has shown that it understands the situation and plight of the industry, which has struggled to survive in the pandemic. Extension of the Emergency Credit Line Guarantee Scheme (ECLGS) and allocation of additional INR 50,000 crores for hotels and hospitality sector till March 2023 has brought a wave of relief to the industry. The budget is also inclusive of aggressive infrastructure development with eight ropeways, an additional 25,000 km of National Highways, 400 new Vande Bharat Trains with modern facilities, etc. Plus, the introduction of the revolutionary ePassport. All these will be instrumental in encouraging both international and domestic travelers to explore the country with ease and give a new lifeline to hospitality brands of all sizes. The hospitality and restaurant industry is one of the biggest employers of human resources in the country and with this kind of promise and support from the government, the industry can expect better business in the coming time. This will encourage better investment by the hospitality brands in the country and generate more economic traction.
Vikas Suri, Senior Associate Vice President, Lords Hotels and Resorts
On the one hand, the Union Budget 2022-23 has proposed to extend the ECLGS as well as allocate an additional INR 50,000 crore to finance the credit demands of the hotel and hospitality sector. This is highly welcomed and appreciated by the industry. However, our industry has faced the brunt since last two consecutive years because of the pandemic, the expectation was for more direct and immediate support. Long pending demand of reduction of GST, waiver or reduction of licence fee would have aided business revival have not been addressed. Lords Hotels and Resorts is a leading hotel chain, and we will encash on the budgetary allocation for major tourism infrastructure schemes, Rs1181.30 crore, which has been earmarked for the Swadesh Darshan Scheme, and Rs235 crore for the Pilgrimage Rejuvenation and Spiritual and Heritage Augmentation Drive (PRASHAD) Scheme as we look forward to expand our hotels further.