India's Travel Industry Seeks Boost with Visa Waivers and Tax Reforms

By Ivan PetrenkoJan 26, 2024 10:53 AMNews
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On a moving train
On a moving train. Source: unsplash

The Indian government's allocation of INR 24 billion ($290 million) to the travel and tourism sector in the 2023-24 budget highlights its recognition of the industry's potential. According to the World Travel and Tourism Council (WTTC), this sector is poised to contribute 7% to India’s GDP, reaching INR 37 trillion ($450 billion) and employing 58 million people by 2033.

A major point on the sector's wish list is implementing visa-free arrivals for travelers from key markets. This strategy, inspired by Asian counterparts like Malaysia and Thailand, aims to boost foreign tourist arrivals and enhance India’s global tourism competitiveness. Rajesh Magow, Co-Founder and CEO of MakeMyTrip, advocates for this move to create a reciprocal environment beneficial for the sector.

Another significant demand is for marketing grants to establish India as a premier global travel destination. Mehul Sharma, CEO of Signum Hotels & Resorts, underscores the necessity of a robust PR strategy for even the most exotic locales.

The travel industry is also voicing concerns over the recently-implemented travel tax, seen as disadvantageous to domestic companies compared to foreign entities. The tax mandates a 20% collection for spends over INR 700,000 on overseas travel, which foreign-based companies are exempt from. Industry leaders propose standardizing the Tax Collected at Source (TCS) rate on outbound tours to a single 5% slab, as suggested by Vishal Suri of SOTC Travel and Nishant Pittie of EaseMyTrip.

Domestic online travel agencies (OTAs) face another challenge: the disparity in taxation between ecommerce operators and suppliers. Currently, a 5% tax is levied on non-AC bus bookings through ecommerce platforms, while direct bookings from operators are tax-free. Rajesh Magow highlights this as contradictory to the Digital India initiative.

Hotel investment is another focal area, with calls for rationalizing goods and services tax (GST) rates and allowing GST credit for hotel construction. This move, Magow believes, would make accommodations more accessible and stimulate further investment in the sector.

The industry's wishlist extends to subsidized loans for hotel construction, tax holidays for new projects, reduction of Aviation Turbine Fuel (ATF) tax, investment in underleveraged destinations, and incentives for sustainable practices and digital payment adoption.

Minor Hotels' Strategic Expansion in India

Minor Hotels is also making strategic moves in India, with Vijay Krishnan-Vazhvelil appointed as the vice president of operations. With over two decades of experience in luxury hospitality and a background in notable hospitality groups, Krishnan-Vazhvelil's expertise will be pivotal as Minor Hotels prepares to launch its first Anantara property in Jaipur.

Amir Golbarg, senior vice president of Minor Hotels, notes Krishnan-Vazhvelil's significant experience in luxury hotel management as a valuable asset for the company's expansion in India. This move signifies Minor Hotels' commitment to strengthening its operations and presence in the Indian market.

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