As promised in its election manifesto this year, the maiden Union Budget of the new government, presented in the Parliament today by Arun Jaitley, Minister for Finance, Government of India, gave due priority to the tourism sector, with quite a few favourable announcements. Some of them are introduction of E-Visas at nine key airports, Service Tax exemption for select tour operators, and development of five tourist circuits. TravelBiz Monitor speaks to industry players and experts to get their view on the Budget
Madhavan Menon, Managing Director, Thomas Cook (India) Ltd.
We laud this pro-tourism move by the government. â€˜Incredible Indiaâ€™ will get a much needed boost with the issuance of E-Visas at nine major Indian airports. Given the rapid evolution of global travel dynamics, key initiatives like E-Visa will create viable impetus, vital for building critical mass momentum and infusing demand into the under-leveraged inbound segment. E-Visa implementation will give India an edge over neighbouring countries, also creating an immediate window of opportunity for the upcoming inbound season.
The multiplier effect on allied businesses, connected both directly and indirectly with the tourism industry, will augur well for the economy as a whole and we look forward to swift and effective implementation of E-Visas.
The governmentâ€™s pro-tourism focus also sees manifestation via key initiatives announced in the Budget, such as Rs 500 crore for developing five tourist circuits around specific themes, Rs 100 crore for National Mission on Pilgrimage Rejuvenation and Spiritual Augmentation Drive (PRASAD), Rs 200 crore provided for National Heritage City Development and Augmentation Yojana (HRIDAY), etc.
Safety of women, a mission critical element, has been afforded prime importance and much needed delivery via Budget initiatives like the Crisis Management Center for women.
The governmentâ€™s unerring focus on modernisation and technology is music to our ears, and we see the National Rural Internet and Technology Mission giving a boost to leveraging the powerhouse of emerging Regional Tier-II and III markets.
The PPP initiatives with Rs 100 crore set aside for metro projects in Ahmedabad and Lucknow will give impetus for both Domestic and Inbound Tourism.
Subhash Goyal, President, Indian Association of Tour Operators (IATO)
This is the best ever budget for the tourism industry in the history of India. We are grateful to the Ministry for considering our long-pending demand for E-Visa. With this, international tourist arrivals to India will grow by 30-40 per cent on a yearly basis and also generate additional employment for 50 million people and substantial increase in Foreign Exchange Earnings (FEEs). A lot of other hopes from the Budget have also been met like streamlining of taxation system, exemption of Service Tax on some services, CENVAT Credit allowed to tour operators, to create five tourist circuits across the country, and to enhance rail connectivity to the North East.
Sarabjit Singh, Vice Chairman, Federation of Associations of Indian Tourism Hospitality (FAITH)
We are delighted to know that the Union Budget has heeded some of our requests like implementation of E-Visa in a phased manner over the next six months, CENVAT Credit for tourist transportation and tour operators, no Service Tax for tour operators earning foreign exchange, etc. While the first step has been taken in this interim budget of mainstreaming tourism, we are going to partner more intensely with the Ministry of Finance for the next budget for incorporating further suggestions.
We are now looking at the soon to be announced FTP for further push on tourism. The fine print of Union Budget will reveal more details.
Sajid Khan, Country Manager- India, South African Airways
The Finance Ministerâ€™s proposal to introduce E-Visas in a phased manner at nine airports complements the governmentâ€™s expansion of the Visa-on-Arrival (VoA) scheme announced earlier this year. Both moves will help create a more robust tourism sector. Plans to develop more airports through the PPP model, especially in Tier-II and III cities will also open avenues of growth for the aviation sector. New airports will not only allow domestic carriers to tap newer markets, but also help their international counterparts expand their footprint in India by reaching out to tourists in smaller cities through existing or new code-share agreements.
Vikram Malhi, Managing Director, Asia, Expedia
The government has kept up with their promise of developing tourism as a core sector for growth and economic development of the country. Keeping in line with the 100-day aviation policy and a promising Rail Budget, the government has announced a number of measures for holistic development of the sector.
Allocation to develop basic tourism infrastructure like new airports in Tier-I and II cities, boosting rail connectivity across the country, expanding road transport and infrastructure development through expressways is a great step forward to improve accessibility across the country, especially the North Eastern region.
The proposal to build five tourist circuits will not only help channelise domestic tourist traffic, but also catalyse tourism infrastructure development while generating employment and accelerating economic progress for the region.
The government has also aggressively looked at measures to increase the inflow of foreign exchange through Inbound Tourism by focusing on infrastructural development, increased connectivity and additional tourist circuit development. Destinations like Goa already attract a high share of foreign tourists, developing a world-class convention facility will also help channelise a larger share of MICE Tourism to the country.
The announcement of E-Visas at nine airports will also help in expanding the footfall of foreign tourists beyond the key metros while facilitating an easy visa procuring process.
The government understands the importance of safety of women and has aptly focused on taking measures to improve the current scenario. This step will not only help the residents to feel safer, but also increase security for solo women tourists, both domestic and foreign.
Rakesh Lamba, immediate Past President, Association of Domestic Tour Operators of India (ADTOI) (Director, Prakriti Holidays)
The need of the hour is new destinations and circuits. Although the new Budget has proposed funds for the same, the amount is not too high. But nonetheless, the move is appreciable. We heartily welcome the Budget, which will lay more emphasis on the growth of tourism.
Jyoti Kapoor, Managing Director, Vietrade Tours Travels
Tourism is lagging because of lack of infrastructure. So the announcements made in the Budget are pro-development of tourism infrastructure. This is a welcome step by the government for the industry.
Ankur Bhatia, Executive Director, Bird Group and Member, CII National Committee on Civil Aviation
This yearâ€™s Budget was definitely better than expected from the perspective of the travel and tourism industry. The decision to develop new airports in Tier-I and II cities is a positive for the sector as growth in the aviation sector will come from regional travel, which will add the much needed dimension to the industry. Another positive move for the tourism industry has been the Service Tax exemption for select tour operators.
The decision of introducing E-Visa in a phased manner at nine airports will provide the much expected boost to the tourism sector. A strong focus on regional infrastructure and connectivity will also benefit in bringing investments from foreign airlines as well for generating employment.
Vijay Kesavan, CEO, Musafir.com-India
A strong boost was required for the Indian tourism, aviation and hospitality sector, which has a strong potential to improve the countryâ€™s GDP growth. With the announcement of a positive Union Budget 2014-15, we are sure that it will boost not only the Inbound and Outbound tourism traffic, but will also fuel the Domestic Tourism segment. One of the top initiatives announced during the Budget is the introduction of Electronic Travel Authorisation (ETA) or E-Visa at nine key airports in India. We welcome this growth-oriented budget by the government and look forward to more such pro-tourism initiatives to uplift the Indian tourism sector.
Rajesh Magow, Co-Founder CEO – India, MakeMyTrip
The development of new airports in Tier-I and II cities through Public-Private-Partnership (PPP) mode is a positive and progressive step. This will promote air travel among a large number of Indians and will enhance Leisure and Business Travel within and outside the country.
We also welcome the introduction of E-Visas at nine airports, as it will aid VoA and provide the tourism sector the much-needed boost. Also, the announcement of an outlay of Rs 1,000 crore for rail connectivity in the North East region will expedite tourism-related infrastructure development in the region. The government has further demonstrated support for the travel and tourism industry by allocating Rs 100 crore for development of archaeological sites. Executed and marketed rightly, this will undoubtedly attract a new set of inbound tourists to the country.
However, we expected more for the civil aviation sector. Some rationalisation on tax on Aviation Turbine Fuel (ATF) to bring it in line with international levels would have made it a level playing-field for Indian airline operators.
GMJ Thampy, Chairman Managing Director, Riya Group Enterprises
Having had expectations of development in the infrastructure sector, which would make it easier to commute within the country, I am pleased that the Budget attempts to develop metro rails and 100 smart cities. This initiative can encourage domestic and inbound travel to India. The attempt to introduce E-Visas at nine airports will further boost the industry.
Tax exemptions had not been touched since 2006, despite soaring inflation rates, but with minor corrections in tax exemption, the new Budget will surely help improve the lifestyle of the common man. An increase in savings and disposable income could boost leisure travel in the proposed financial year.
The proposal of â€˜Namami Gangaâ€™ will help preserve our countryâ€™s heritage, which constitutes a major part of Indiaâ€™s tourist attractions. With Foreign Direct Investment (FDI) in rail, subsequently in defence, insurance and real estate, I hope the Budget will help revive GDP growth and in turn benefit the industry as a whole.
Akshay Kumar, President, Adventure Tour Operators Association of India (ATOAI)
We feel that this is a positive and progressive Budget with due recognition and sops for the tourism industry. ATOAI has been raising key issues at various levels of the government for a few years now. We are happy that finally some of our demands are seeing the light of day.
The fact that Service Tax has been waived off for foreigners travelling to other countries through Indian operators makes us more competitive. Extension of CENVAT Credit for tour operators is also a promising step.
E-Visas is the highlight in this Budget and this alone will remove numerous roadblocks for Inbound Tourism. The rollout needs to be fast and efficient to get immediate benefits. We also feel great that finally the government has recognised Adventure Tourism as one of the key sectors to be developed in Himalayan states. This move will help us in bringing economic benefits to the doorstep of remote communities, which largely remain cut off from government schemes.
On the flip side, we expected more from the Finance Minister by reducing or completely waiving off Service Tax. Also it seems that Tourism is yet not seen as an export industry, and hence still does not enjoy benefits that other export sectors like textiles and software do.
Though development of airstrips in Tier-II and III cities is a good step, ATOAI has been pushing for Greenfield airstrips and air connectivity in the Himalayan regions for a long time, and this has still not seen any progress. Another long-standing demand not addressed in this Budget is the waiver of Excise and Customs Duty on import of adventure travel equipment.
We will keep making presentations and hoping for an even more progressive and Adventure Tourism-friendly Budget in 2015.
Overall we think the new government has moved in the right direction with this budget.
Naveen Advani, President, Enterprising Travel Agents Association (ETAA)
There are definitely many provisions with respect to tourism in the Budget this year, however, these provisions stress on Inbound Tourism. It is, of course, important to promote tourism to India to a great extent, but there is also need to ease Outbound Tourism from India. The Budget has no special incentive for outbound tour operators and tourists.
Pradip Madhavji, Chairman, Travel, Tourism Hospitality Committee, Indian Merchantsâ€™ Chamber
For the first time ever, tourism has featured in the Budget, which means â€˜happy days are here againâ€™. The focus was to boost Domestic and Inbound Tourism in the country. With this, we can encourage Regional Tourism within the SAARC region. The announcements on E-Visa, convention centres, tourism circuits and Service Tax exemption to select tour operators were encouraging. VoA has not picked up yet, but now with E-Visa proposed at nine airports, it will definitely pave way for it to happen. The proposed E-Visa facility is an exceptionally positive move for business travellers and MICE movement.
Peter Kerkar, Director, Cox Kings
The governmentâ€™s emphasis on travel and tourism in this yearâ€™s Budget was on expected lines as the government has shown an intent and willingness to use the sector to promote inclusive growth.
The thrust on Pilgrimage and Heritage Tourism with emphasis on Buddhist Tourism circuit centered around Gaya in Bihar, will enable India to attract tourists in this segment from South East Asia, Japan and Sri Lanka. The proposal to earmark a sum of Rs 100 crore to revive Heritage Tourism will lead to development and promotion of new tourism circuits. The proposal to develop five more tourism circuits will enable India to broaden its tourism offerings, which till today is concentrated only on a few circuits.
The move to develop an international convention centre in Goa is welcome as India can then attract huge conventions and conferences that do not consider the country at the moment. This segment does not consider India as an option as we do not have world-class convention facilities. Goa is the ideal venue with its air and rail connectivity and this will encourage more traffic to the destination.
Development of more airports under PPP mode is the need of the hour as India lacks airport infrastructure in Tier-II and III cities. It now depends on how fast the government lays out the roadmap and makes it attractive for private players to bid for such projects.
The proposal to introduce of ETA or E-Visas at nine airports will definitely lead to an increase in Foreign Tourist Arrivals (FTAs), thus increasing FEEs.
P R Srinivas Director, Hospitality, Cushman Wakefield
Taken together, the Railway Budget and the Union Budget provide a good start to achieving the stated goal of the government about the 5 Tâ€™s. Given the fiscal conditions, as well as competing requirements from other sectors, the government has walked the tight rope well.
Several schemes focused on the tourism and hospitality sectors include the development of new airports in Tier-I and II cities, availability of E-Visa at nine airports, development of the Buddhist Circuit in addition to five other themed tourism circuits, and the development of a convention centre at Goa. All of these can lead to the deepening and widening of the tourism offerings to both international and domestic travellers.
The Railway Budget earlier this week also highlighted the need for better stations, train rakes, improved IT implementation (especially for ticketing). All these will facilitate travel, and if implemented as planned, take the drudgery out of travel.
The urban development, along with the heritage and pilgrimage destination initiatives, have the potential to rejuvenate growth centres, providing a much-needed fillip to domestic travel and consumption, again, a good news for the industry.
On the capital raising front, too, the government has clarified taxation treatment for Real Estate Investment Trusts and Infrastructure Investment Trustsâ€”possibly leading to sustainable funding to the hospitality sector (the largest consumer component within the tourist cycle, excluding aviation).
Relaxation of norms for FDI in urban development will spur demand in the Tier-II and III destinations, which again augurs well for the travel, tourism and hospitality industry. The extension of concessional withholding tax to all bonds to boost low-cost, long-term foreign borrowings to June 2017 should also make capital sourcing to Indian companies more attractive.
The travel trade has received attention, in that Service Tax exemptions have been granted for earnings outside India, as well as inclusion of CENVAT Credit for rent-a-cab services and tour operators.
Pradip Lulla, National General Secretary, TAFI
The Budget is a positive, especially because Modi government has given importance to the tourism industry. Service Tax exemption makes us competitive for our counterparts in foreign countries. Developing of statues also in the long run is pointing to tourism development as across the world tourism is centred on monuments. Besides the initiative to launch E-visa is also appreciable but we expected reduction in ATF and formation of a regulatory board for airlines. Unfortunately that did not happen.
Rajeev Wagle, Managing Director, Kuoni India
With the proposals made for the tourism industry in the Budget 2014-15, it is time for growth of the sector. The Budgetâ€™s recognition and commitment to tourism as an important revenue earner and generator of foreign exchange for the government is a boost to the industry in general.
Proposals such as the scheme for development of new airports in Tier-II and III cities, focus on development of archaeological sites as world-class tourism spots, introduction of E-Visas at nine airports to facilitate VoA, exemptions from Service Tax in the case of foreigners travelling via Indian tour operators to a third country are steps towards sustainable growth within the sector.
The exemption of Service Tax for broadcast and online advertisements and print advertisements provides numerous opportunities for effective marketing undertaken by tour operators and tourism boards. This will surely help tap the potential within the outbound market, while they position and promote their offerings to bring about a definite increase in international travel.
Shailesh Patil, Managing Director, Kesari Tours
It looks like the Budget 2014-15 will revive the economy. The Budget was meant for everybody and gave due importance to every class of people. The right budget was allocated for the right departments. The proposals made for upliftment of the tourism sector is encouraging. Once the tourism is taken care of, everything else falls in place, for instance infrastructure development, employment, connectivity, etc.
S M Shervani, President, Federation of Hotel and Restaurant Associations of India (FHRAI)
FHRAI welcomes the announcement regarding implementation of the ETA/E-Visa policy and the allocation of Rs 500 crore for the development of five theme-based tourist circuits. However, we feel that the Budget does not entirely do justice to the government’s own ambitious vision for the tourism sector. In particular, our industry is disappointed that no tax relief or other specific incentives have been proposed for the sector. In light of the Prime Minister himself identifying tourism as one of the five priority areas for India’s transformational future growth, we were confident that the government’s maiden budget would take decisive steps to streamline the sector’s multiple tax regime, which has been the primary impediment undermining India’s global competitiveness in tourism.
In this context, hotels and restaurants should have been included in the Negative List for Service Tax, pending introduction of GST. The same revenue base is already taxed by way of VAT and Luxury Tax imposed by state governments, and the additional levy of Service Tax by the Centre clearly amounts to double taxation.
It is FHRAI’s view that the relatively meagre tax revenue, which the Central government generates on this account, is insignificant compared to the massive economic opportunity that the country is losing in terms of additional employment generation, capital investment and forex earnings, by failing to effectively capitalise on the intrinsic potential of our hospitality and tourism sector.
We endorse the strong emphasis that the Finance Minister has laid on leveraging PPP mode for executing key infrastructure projects. The innovative mechanisms that have been announced to allow the infrastructure sector to access long-term financing is a key positive of the Budget and also resonates with the recommendations that we had made in our pre-budget submission.
With the development of new tourism circuits and better air connectivity to Tier-II cities being planned, it is imperative that simultaneously a thrust be given to budget and mid-segment hotels by lowering the minimum project cost currently stipulated for inclusion of hotels in the harmonised master list of infrastructure sub-sectors.
We applaud the initiative to set up a Rs 10,000-crore fund to provide equity, soft loans and other forms of risk capital for start-up companies.
FHRAI had recommended in our pre-budget memorandum that we must focus on institutional mechanisms aimed at transforming our youth from being job-seekers to job-creators. This is an important step towards this very goal.
Aloke Bajpai, CEO and Co-Founder, ixigo.com
Better infrastructure in travel and tourism with introduction of E-Visa facility at nine airports, development of new airports in Tier-I and II cities, Rs 100 crore for metro projects in Lucknow and Ahmedabad, and allocation of Rs 1,000 crore for rail connectivity in North East, besides the funds committed in the interim budget are steps taken in the right direction to boost the tourism sector. The focus on travel and tourism is further reaffirmed with the Finance Minister announcing Rs 100 crore towards development of archaeological sites, with Gaya to be developed as a world-class tourism spot, in addition to creating five tourist circuits.
The start-up community has a lot to cheer about, with the governmentâ€™s move of allocating Rs 10,000 crore venture capitalist fund to boost innovation and entrepreneurship. The governmentâ€™s intention to revive Special Economic Zones (SEZs) will also attract budding start-ups.
Vishal Sinha, COO, TUI India
The government has sent out the right signals as the Budget has focused on overall growth and also on tourism. It looks like a promising budget with impetus on infrastructure development, more airports, smart cities, etc. There are also tax sops, which will increase disposable income, which in turn is good news for the travel industry. Today travel or holidays are something that people look at first when they have disposable income. Announcement of implementation of ETA or E-Visa at nine airports is also a good move and will help boost Inbound Tourism.
Hector Dâ€™souza, Persident, Lâ€™orient Travels
Offering E-Visa at nine airports is a positive move for increasing Inbound Tourism. By increasing Income Tax exemption limit to Rs 2.5 lakh, which will result in more spending power, which could result in increase Domestic Tourism. By increasing emphasis on cleanliness in trains and at railway stations as well as introduction of branded food in trains will enhance experience on rail travel. Considering the constraints involved, the government should look at increasing infrastructure spending in the next budget.
Ashwini Kakkar, Executive Vice-Chairman, Mercury Travels
It is one of the best budgets for the travel and tourism sector. After many years, tourism has found mention in the Budget with constructive measures to boost the sector. While there was no â€˜big bangâ€™ announcement, the one thing that can fit the bill is ETA or E-visa at nine airports in the country. While the previous government had initiated E-Visa, the new government has put a time frame of six-month to implement it and this should help boost Inbound Tourism. There are a host of measures that have been announced like infrastructure development in terms of airports in Tier-I and II cities, development of 16 ports, smart cities, highways, rail connectivity, convention centre on PPP mode in Goa, allocation of funds for five new circuits, preservation of heritage sites, increase in baggage allowance from Rs 35,000 to Rs 45,000, reforms in Service Tax, increase in Income Tax exemption limit, which will result in high disposable income, etc.
Manoj Gursahani, Managing Director, Travelmartindia.com
From a tourism standpoint, the Budget is well balanced, especially the E-Visas, investment in airports, world-class convention facilities, and allocation of funds for tourist circuits will really help boost Inbound Tourism.
Amber Dubey, Partner and India Head of Aerospace and Defense, KPMG
Aviation continues to suffer from an elitist image and hence has simply been ignored in Budget 2014. None of the big-ticket reforms like relief in excessive taxes on ATF and Maintenance, Repair and Operations (MRO) have been considered. The Budget mentions development of airports in Tier-I and II cities through PPP, without any specific details. Instead, around Rs 7000 crore of taxpayersâ€™ money has been gifted away to perpetually loss-making Air India with no clarity about the possibility of its turnaround or privatisation.
Developing new airports through PPP mode in Tier-II and III cities is good news and will increase domestic air traffic. The next generation of aviation growth in India is expected to be triggered by regional airports. Efforts must be undertaken to activate these airports through PPP, subject to their long-term financial viability.
IT relief for individual taxpayers will make available a bit more disposable income to individuals. Some of this may translate into greater spend on travel and tourism, thus benefiting the aviation sector.
Increase in baggage allowance from Rs 30,000 to Rs 45,000 may encourage people to shop more. But a part of this may be spent in duty-free shops abroad (eg. Dubai, China and Thailand) on electronic items like LCD TVs and mobile phones. The largest purchases at Indian duty free shops are of alcoholic beverages and tobacco products, the limits on which have not been increased. Hence this may have a positive, but not a significant impact on duty free sales in India.
Introduction of E-Visas in a phased manner at nine airports in the next six months complements the VoA scheme announced earlier this year and is expected to increase inbound visitor flow substantially. Business travel and MICE Tourism could see the most improvement. However, it is critical that the implementation is quick and effective and communication to visitors about the system is accurate.
Overall, nothing great has been announced for aviation.
(With inputs by Kunal Sinha, Senior Consultant, Aerospace and Defence, KPMG)
Manish Raj, Vice President – Corporate Sales, Via.com
Budget 2014-15 is realistic and if implemented well, this will bring in the required positive change to the fiscal deficit and improvement in financial sector. With impetus to infrastructure, highways, manufacturing sector and relief to tax-payers, hopefully we see better days ahead. With all of this being implemented and a roadmap being laid, it also impacts the travel and hotel industry positively. I am expecting better business for airlines and hotels and people travelling to grow their businesses.
Also, the Finance Minister has laid focus on Goa becoming a renowned conferencing destination and to build a world-class conferencing destination there. This also brings in a larger bulk of foreign nationals, not just for holidays, but also for serious business.
River Ganga being rejuvenated and focus on tourism along the river flow is a positive outlook for a new opportunity to attract tourists and highlighting the heritage. Hundred smart cities sound very promising and this bring in more funds to the tourism sector. Impact will be seen in the next couple of years, but the way forward looks promising.
Om Prakash Sehgal, Director, In Orbit Tours and Travels
For the first time, the travel industry has appeared in the Budget speech of the Finance Minister. The introduction of E-Visas at nine airports will certainly help increase inbound travel to India. We have been getting complaints from inbound travellers that for nationals of certain countries, it takes a long time to obtain the Indian visa. Hence, this will encourage travel to India.
The development of five tourist circuits will be another positive step to lure tourists to India. Development of the Buddhist Tourism circuit will help improve facilities and infrastructure at pilgrim destinations, besides increasing employment opportunities.
Over all, the above incentives and facilities will help increase Inbound Tourism to India as tourists.
Tourism industry lauds Budget 2014-15