Budget 2025: Hospitality Sector Seeks Infra Status, Rationalisation of Tax Rates

Lack of infrastructure status, rationalisation of tax rates, easier visa processes and more incentives by state governments to promote investments are some of the key issues that need to be addressed for India's hospitality sector to realise its full potential, Hotel Association of India President K B Kachru said ahead of the Budget.

In an interview to PTI, Kachru, emphasised upon the need for India to be marketed in a better fashion, and noted that countries like Japan, South Korea and Thailand have been able to grow their GDP by giving importance to the tourism sector.

He emphasised upon the need for India to identify and promote MICE (Meetings, Incentives, Conferences, and Exhibitions) destinations with high potential, and work towards building the required infrastructure to draw tourists globally.

"We need investment. Investment can't be done by the government alone. Private sector has to come in and invest. What would motivate them to invest in the country is they must have a respectable (return on investment) ROI then only they will invest," the Hotel Association of India President said.

Highlighting that "taxation is a big issue" in India, Kachru pointed out the differential rates of taxation and stressed upon the need to rationalise the tax rates and follow best practices of countries such as Singapore, Sri Lanka and Thailand.

Moreover, he said, at the state level, governments have to be forthcoming in inviting people and giving them some incentives to invest their money.

Also Read | OYO Gets 'B2' Rating from Moody's; What Does It Mean For The Hospitality Giant?

"... There was a time when we used to have close to 100 licenses to start a hotel. It has been substantially reduced. But still, I think we need to, we need to make it easier for people to operate hotels... Principally, everybody accepts that there should be a single window, but till that stage comes, I feel we should reduce approval processes to the minimum," Kachru said.

He noted that there should be an easier visa process to boost the tourism sector.

Kachru said countries like Japan, South Korea and Thailand have been able to grow their GDP by giving importance to the tourism sector.

Stating that the contribution of tourism to Thailand's GDP is about 25 per cent, he said, "We (India) are still struggling around 6 per cent or so... If we give it infrastructure status, the loans will be at a decent rate, as given to all other industries. we're not asking for more."

Incentives to develop infrastructure in terms of hotels, entertainment centers and convention halls should be provided at the 50 new destinations that the government announced to develop, he added.

Finance Minister Nirmala Sitharaman while presenting the Union budget 2023-2024, said at least 50 destinations will be selected and developed as a complete package of tourism.

"So I'm saying, if you are doing those 50 destinations, if there's a project worth Rs 10 crore that should also be part of the industry. We cannot say it can't be done," Kachru noted.

On the hospitality sector's demand for industry status by states, he said, "State governments have to give it the industry benefit. Look at electricity tariffs, whatever you are giving to other industries as electricity tariffs give to the hotels also."