India travel and tourism facing urgent economic crisis

India travel and tourism facing urgent economic crisis
India travel and tourism facing urgent economic crisis

The effect of the pandemic continues to wreak havoc on the lives and livelihood of India travel and tourism as well as hospitality for the second consecutive year. While some sectors are slowly opening up again, the struggle continues to make ends meet.

  1. The India travel and tourism industry had contributed US$194 billion to the Indian economy in 2019 and created about 40 million jobs, i.e., 8 percent of its total employment.
  2. This all came to a halt due to the pandemic and this has created a ripple effect through the industry.
  3. The result has been that many hotels and businesses closed down creating job losses for many of those who depended on this industry for their livelihood.

Health experts have predicted that a third wave of COVID-19 is inevitable. The government needs to act now and provide immediate relief measures to resolve the urgent liquidity crisis faced by the India travel and tourism industry.

The Federation of Indian Chambers of Commerce & Industry (FICCI) has once again appealed to the government for the moratorium on all working capital, principal, interest payments, loans and overdrafts which ended in August 2020 to be extended by another 1 year, i.e., August 2021.

The RBIโ€™s resolution framework, which was prepared during the first wave of the pandemic, needs to be reviewed. With the continued impact of the second wave, it will take a minimum of 4-5 years for the hotel industry to see a return to some semblance of normalcy in its operations. In this situation, the period of restructuring and the ratios needs to be reviewed. It is imperative that the period of restructuring for this sector be extended till March 2024 – 2025.

FICCI has also requested the government to increase the repayment tenure of the Emergency Credit Line Guarantee Scheme (ECLGS) to 8 years (4 years moratorium plus 4 years repayment). The tour operators, who are among the worst affected in this sector, are in dire need of the Service Exports from India Scheme (SEIS) scrips for the financial year 2018-2019 which is still due to be paid to them. This will help them to somewhat stay afloat through the crisis.

India travel and tourism facing urgent economic crisis

The deferment of GST and advance tax payments at the Central Government level and removal of fees for any upcoming licenses, permits/renewal and bail out packages to fund and support salaries of the employees will also provide some relief. The government needs announce the relief measures now for the industry to have any hope of surviving the crisis.

The India travel and tourism industry also needs continued support from the government to revive and stay strong in the future. FICCI has recommended that India tourism must be included in the concurrent list of the Constitution so that both the Centre and the states can frame tourism policies for the growth of Tourism. To revive domestic tourism, 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).

Key policy changes such as granting infrastructure status to all hotels, granting export status for foreign exchange earnings for inbound tours & hotels and establishing an โ€œAmusement Manufacturing Hubโ€ under Atmanirbhar Bharat Abhiyan across all states will support overall development of the sector.

India travel and tourism facing urgent economic crisis

India Travel and Tourism industry speaks

A much-respected India travel and tourism leader, Amit Prasad, the CEO of Le Passage to India, is gravely concerned about the current state of the travel and tourism industry. He said not much is being done by the Government of India to revive travel and tourism in the country. He added that the country’s industry is on the verge of collapse, and those who have so far been able to survive in the industry have had to let workers go and cut wages just to stay afloat.

Inย India, from January 3, 2020,ย toย today, June 23, 2021, there have beenย 30,028,709ย confirmed casesย of COVID-19 withย 390,660ย deaths, reported to the World Health Organization (WHO). As of June 15, 2021, a total ofย 261,740,273ย vaccine dosesย have been administered.

#rebuildingtravel

About the author

Avatar of Anil Mathur - eTN India

Anil Mathur - eTN India

Share to...