In a bid to boost economic growth and to create more jobs, the Indian government is, in its budget to be presented next month, planning to cut taxes in the travel and tourism industry and give more incentives to the sector.
“We’ll announce measures in the budget to promote investment in the tourism sector,” a Finance Ministry official said, Reuters reported. The official added that Finance Minister Arun Jaitley is in the favor of lowering the 28 per cent tax on hotel tariffs, and offering incentives to attract private investments. These steps could lead to a domestic tourism boom in the $210 Indian tourism sector.
The budget may “significantly” raise allocations for tourism infrastructure and raise income tax exemptions on investments in new hotels, a government official said, the news agency added. Jaitley was expected to lower income tax on corporate profit, offer tax incentives on hotel construction, allocate more funds for new tourist trains and building roads to tourist destinations.
“Tourists in India, on an average pay 30 per cent tax on hotel rooms and travel as compared to less than 10 per cent in Singapore, Thailand and Indonesia,” Pronab Sarkar, the president of the Indian Association of Tour Operators (IATO), was quoted as saying in the report.
To cover new, under-served airports, the government is set to offer incentives to more regional airlines this year, the official added. In October 2017, surveys conducted on the Indian aviation sector showed that India’s domestic aviation market is currently the third largest in the world, and in a few decades the total aviation market of the country will reach that rank.
At a tourism-sector CEO forum that was jointly organized by the Department of Industrial Policy and Promotion and the Tourism Ministry last year, the participants had pointed out that India faced a shortage of 2 lakh hotel rooms, particularly in the mid-segment that charged room rents of Rs 2,000 or less. Tourism Minister KJ Alphons had said then that the government has set a target of increasing the annual foreign tourist arrivals into the country to 40 million from the present 14.4 million in five years, and increase job creation to 100 million from the present 43 million.
India has also carved a niche for itself as a hotspot for wellness tourism. A KMPG report on tourism industry in 2017 said that it is among the top five destinations for wellness services, along with China, Brazil, United States, and Indonesia.
In April 2017, the state governments of Chhattisgarh, Gujarat, Karnataka, Rajasthan and Uttarakhand signed 86 memorandum of understandings (MOUs) for developing tourist places in their respective states.