On Wednesday, the Federation of Hotel & Restaurant Associations of India (FHRAI) outlined a series of pre-budget expectations with the goal of reshaping the hospitality sector in India.
The hotels’ industry association proposed granting universal infrastructure status to hotels with a project cost exceeding INR 10 crores, regardless of the city’s population. This initiative seeks to eradicate geographical biases and enhance growth and accessibility within the hotel industry.
“The inclusive approach aligns with the spirit of equitable development, promising a remarkable nationwide surge in the hospitality sector,” it said in its report.
The apex association for the hospitality sector emphasized that conferring infrastructure status would have a transformative impact, enabling the sector to access long-term loans at cost-effective interest rates, thereby expediting its overall growth. Additionally, the sector anticipates further stimulus packages and incentives from the government to better equip it in attaining the ambitious goal of hosting 100 million international tourists by 2047. This includes advocating for a favorable GST regime and implementing measures to simplify business operations within the hospitality industry.
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“The hospitality industry is a vital contributor to India’s economic growth. We believe that the proposed pre-budget reforms are pivotal in catering to the untapped potential of our diverse nation, propelling the hospitality sector towards unprecedented growth. FHRAI urges the government to consider these reforms seriously, recognizing the crucial role of tourism and hospitality in shaping India’s economic landscape,” said Pradeep Shetty, President of the Federation of Hotel & Restaurant Associations of India.
As per the FHRAI pre-budget expectations report, the absence of a uniform system in the hospitality sector for approvals and compliance has been a concerning issue, hampering the growth of the tourism and hospitality sector in the country. From the inception of a hospitality project to the day-to-day running of the establishments, the sector is tangled in the complex web of bureaucratic processes.
“This needs to be simplified through measures such as a single window clearance system deemed approvals, self-regulation, merging of multiple approvals & licences and fixing a validity period of a minimum of 5 years for the license,” it said.
The federation emphasized the imperative to categorize tourism, travel, and hospitality under the concurrent list, aiming to establish a unified national framework shared between the Centre and States for all aspects of tourism and its related sectors.
The federation identified tourism as a crucial sector in the country, contributing approximately 10 percent to the GDP. Recognizing the substantial potential of the tourism and hospitality industry to serve as a primary catalyst for socio-economic development, it advocates for the declaration of tourism as a priority sector in the country. This designation would involve providing special incentives and benefits to empower the sector in realizing its full potential.
FHRAI has urged for a thorough examination and reduction of GST rates within the hospitality sector, with the aim of positioning India competitively on the global stage. In particular, the proposal advocates for the elimination of the 18 percent GST category applicable to hotels exceeding INR 7500, suggesting its merger with the more moderate 12 percent GST category.
Finance Minister Nirmala Sitharaman is all set to deliver the interim budget on February 1, ahead of the Lok Sabha polls scheduled in 2024.
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