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Support from Govt critical in survival & revival of Indian Tourism industry: FICCI

Sep 02, 2020

         Need for a new Tourism Policy; Grant infrastructure status to hospitality sector, Create a separate Tourism fund

         12-month waiver of statutory dues, Lending to Tourism sector MSMEs to be treated under 'Priority Sector lending'


NEW DELHI, 02 September 2020: The COVID-19 has severely affected all sections of the economy. Travel and Tourism has been severely impacted due to the lockdown with the restriction on movement, operations of hotels and an overall fear of travelling. As a major part of the economy, India's travel and tourism industry contributed USD 194 billion to the Indian economy in 2019 which helped it gain the 10th spot globally, in terms of contribution to the global industry GDP. The industry also created around 40 million jobs, i.e. 8% of its total employment, according to WTTC.

FICCI urges the government to support the Indian Travel & Tourism industry which is critical in the revival and survival of this sector.

Dr Sangita Reddy, President, FICCI said, "Travel and Tourism Industry is one of the most affected sectors due to the pandemic as everything came to a standstill and will take longer to revive. The industry needs major support from the Government to survive and revive. It is critical to keep the sector alive as they serve as a critical infrastructure in the development of an economy."

Dr Jyotsna Suri, Past President, FICCI & Chairperson, FICCI Tourism Committee & CMD, The Lalit Suri Hospitality Group, said, "The support by the Government is critical to help the Travel and Tourism Industry to get through this crisis. A waiver for twelve months of all statutory dues is urgently required with respect to license fees, property tax and excise fees. Bars in hotels should be allowed to open and liquor should also be allowed to be served in restaurants as well. As per the recent MHA order on unlock 4.0, there is no clarity on this. Moreover, banqueting/meetings should be permitted as per the size of the hall."

She added, "A national tourism policy should be issued by the Ministry of Tourism, Government of India which covers common protocols for entry of a tourist into a state. This will act as a uniform guideline for all states to follow."

Mr Dipak Deva, Co-Chairman, FICCI Tourism Committee and Managing Director, SITA, TCI & Distant Frontier said, "The Service Exports from India Scheme (SEIS) scrips which is due to the tour operators for the financial year 2018-2019 must be paid at the earliest. This is only possible if the Government starts accepting the forms. This amount of SEIS will help all destination management companies in tiding over this crisis period with the much-needed working capital."

"India is a large country and a bilateral travel bubble for international travellers should be done on a regional basis for example Russia with Goa. This will help create demand for this winter season, which is not looking promising," Mr Deva added.

Mr JK Mohanty, Co-Chairman, FICCI Tourism Committee & CMD, Swosti Group, said, "Hotels should be given permission to host all kinds of banquets and conference in the hotel, with a ceiling of 50% of venue capacity and maintaining social distancing norm to allow hotels to earn some revenue when other source of business has dried up."

He said, "The interest rate charged by the banks on the moratorium is very high. The Government is requested to look into this and reduce the rate of interest."

Some of the key relief and support needed from the government:

Sr. No.


Electricity and water to tourism & hospitality units should be charged at a subsidized rate and on actual consumption against fixed load.


While the RBI granted a six-month moratorium till August 2020, in view of the current situation, the moratorium needs to be extended for at least another six months on all working capital, principal, interest payments, loans and overdrafts.


The reduction of 100 basis points in the cash reserve ratio to free up liquidity is a welcome move, but this needs to reach the end user.


Create a separate Tourism fund under the aegis of Ministry of Tourism to help businesses to stabilize till tourism sector gets back on track.


RBI's resolution framework: One-time rescheduling of principal and interest dues of borrowers in Hospitality Sector may be permitted in line with the revised estimated cash flows of each project. While the proposed capping of extension in repayment tenure is 2 years based on the assumptions on which the projections are made, if the situation does not improve as expected, a provision should be made to extend this to 3-4 years. Further, the requirement of additional provisioning should be linked to the tangible security available with lenders, viz., additional provisioning at '5%' for Security Cover more than/equal to 1.5 times.


Allow restructuring for companies and accounts that have been overdue for up to 60 days as against the proposed 30 days.


At the end of the tenure of the restructuring, the interest which has accumulated should be converted into a Funded Interest Term Loan (FITL) and the payment schedule of the principal should continue as scheduled over the remaining period of the loan.


In case of projects under implementation: The sudden nationwide lockdown and subsequent migration of labour etc. has seriously hindered on-going construction work of various projects. Therefore, taking into consideration the lock-down period & the remobilization efforts, the Banks/FIs may be permitted to extend the DCCO by 1 year, without treating it as restructuring (in addition to the time period already allowed). 


Stimulus package to stabilize and support the sector in the near term, including a workforce support fund to ensure that there are no job losses. Hospitality sector is a large employment generator and worldwide various governments are providing monetary support to the extent of 60-80% of salary expenses for the next 2-3 years as a special relief to keep retrenchments/job losses at lower side.


Lending to MSMEs in the Hospitality sector may be treated as 'Priority Sector lending', which will enable increased access to bank finance. GOI may consider supporting borrowers in the hospitality sector with payment/reimbursement of six month's interest and providing 5% interest subventions for coming 2-3 years to ensure continuity in business operations/ survival of players in the hospitality sector.


A long standing request by the Industry to the Government is to grant infrastructure status to all hotels to allow them to avail electricity, water and land at industrial rates as well as better infrastructure lending rates with access to larger amounts of funds as external commercial borrowings. It will also make them eligible to borrow from India Infrastructure Finance Company Limited (IIFCL). This has been a long-standing request of the industry and in 2013, the Government granted infrastructure status only to new hotels with a project cost of more than Rs 200 crore each (excluding land costs). However, the status should be given across all hotels so that all hotels benefit from this status.


Grant export status to the industry under Section 2 (6) of IGST Act for foreign exchange earnings. Tour Operators will benefit from this move and give them financial support to survive.


The Government should provide tax rebate of up to Rupees 1.5 lakhs for spending on domestic holidays in the lines of the Leave Travel Allowance (LTA).