BackBudget 2024: Hospitality sector bats for industry status, GST reduction, cites substantial GDP & forex contributions
Budget 2024: Hospitality executives urged the government to grant industry status to the sector, highlighting its significant contributions to GDP and foreign exchange revenues. To drive growth, they propose reduced GST, funding for skills development, and incentives for sustainable tourism.
PremiumThe hospitality sector should be given the status of an industry in the upcoming Union Budget to accelarate growth, senior executives from the sector told LiveMint. The sector has made "substantial contributions" to the nation's gross domestic product (GDP), is labour and capital intensive, and brings in foreign exchange revenues, they pointed out.
"The industry's substantial contributions to GDP, employment, and foreign exchange revenues make it very deserving of such recognition. The industry can't progress sustainably without industrial status to help drive its growth," Anarock Group Chairman Anuj Puri told LiveMint.
Last month, in a pre-budget meeting with Finance Minister Nirmala Sitharaman, Confederation of Indian Industry (CII) President Sanjiv Puri, chairman and managing director of ITC Ltd, also suggested that the sector be given the tag of an "industry."
Later, the Federation of Hotel and Restaurant Associations of India (FHRAI) also asked the government to grant infrastructure status for hotels across all categories.
Sanjay Sethi, MD and Chief Executive Officer at Chalet Hotels Limited said the industry status would "provide significant thrust to companies to keep reinvesting for the growth of the sector".
These executives also said that the Centre should reduce the Goods and Services Tax (GST) on the sector, allocate more funds for skill development, and provide incentives to invest in sustainable tourism.
Currently, different services in hotels and restaurants attract different GST slabs. FHRAI said that a 12 per cent rate should be imposed across all categories.
Anarock's Puri also said the Budget should prioritise tax reduction, faster infrastructure development and improvement - especially in the newly developing tourism zones - and significantly upgrade tourism promotion.
"To further boost local and international tourism, the industry needs airports, and immediate attention should be given to their upgradation. Moreover, regulatory processes related to the hospitality industry must be urgently streamlined," he said.
Chalet Hotels' Sethi said more investments need to be encouraged into the sector for its long-term viability.
"Advantages such as lower utility tariffs, reduced property taxes, easier access to finance and softer loans are crucial for reducing the cost of doing business, ensuring the long-term viability of the sector and in turn, more investments in the sector will bolster job creation," he observed.
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