Magazine - The FHRAI

Jyotsna Suri
Chairperson
FICCI Tourism Committee
Nothing for tourism: The Union Budget has not brought
anything for the tourism industry apart from the relief to
the ailing aviation sector. We were overlooked till now
and we have been overlooked yet again. On top of this,
we have been slapped with a 12 per cent service tax.
Cost to the consumer: The Union Budget announced
by Hon’ble Finance Minister is not a growth budget
but a populist budget. The hospitality & tourism industry has been once again
completely overlooked. Our industry is heavily burdened with multiple taxes
like Luxury Tax, VAT and different states levying different taxes. And now there is
further increase in Service Tax by 2 per cent and the Excise Duty has been hiked
too. This would adversely affect the growth prospects of the industry and result
in higher cost to the consumer.
Nakul Anand
President
Hotel Association of India (HAI)
Limited impact: The Union Budget 2012-2013 presented
in Parliament appears to have limited impact on the
hospitality sector. The Hotel Industry was hopeful that it
would be accorded the status of infrastructure industry
in the Budget. This would have created a liberal financial
environment, enabling it to achieve the target of more than
doubling its hotel room inventory and providing around
25 million new jobs in the tourism sector as envisaged in the 12 th Five Year Plan
period. This, however, has not happened. On the other hand, hikes in excise duty
and service tax would make the hospitality and travel services more expensive.
Sudhir Sinha
President & COO
Best Western India
Sandip Somany
President
PHD Chamber of Commerce
and Industry
Disappointing approach: The
Union Budget 2012-13 has no
‘big-bang’ reforms as expected
considering the present situation
of economic volatility in the
domestic and international
market. The Union Budget for
2012-13 was in line with the
industry expectations and no
major breakthrough has been
noted. However, the move to
enhance the excise duty and
service tax is disappointing. The
move to raise the standard rate
of excise duty from 10 per cent to
12 per cent, especially in view of
the present slowdown in industry
segment would escalate the cost
of production and stoke inflation
which is already showing signs of
re-emergence.
[ Cover Story]
Lack of attention: The proposals announced in the Union Budget 2012-13 once again completely
failed to give the due attention to the hospitality sector. We have, once again lost the opportunity to
support this industry. This is ironical that the service sector which had the highest growth of 9.4 per cent
in the last fiscal and a major contributor to the growth of GDP has been given no advantage.
Making hospitality expensive: The industry for long has been demanding abolishment of Service Tax
from the Government but by increasing it on hotel stays and dining out, the Finance Minister has ensured
that staying and dining out is more expensive now. This will bring a negative impact on the demand.
The budget is also negative for the Indian Rupee, because high twin deficits and high inflation (augured by large government
spending) may discourage some foreign investors. Though the industry contributes in a large way to foreign exchange
earnings and employment generation and GDP, the hospitality industry’s expectations and demands for Industry status and tax
rationalisation, besides others, remain unattended.
Positive we can take: The only silver lining is the exemption from excise duty on specified food items prepared in hotels,
restaurants and the modification in abatement on supply of food in restaurant, outdoor catering service, hotel accommodation
and convention services with selective CENVAT credit benefit. Reduction on tax rate on interest payments for foreign currency
loans from 20 per cent to 5 per cent may provide some relief to limited number of beneficiaries.
Way forward: It was also nice to see the increase in the allocation of fund by 9 per cent in the ‘Incredible India’ campaign
fund. However, its impact on the overall growth of the industry needs to be measured. The Government should focus more
on supporting the private players in this segment and earnestly declare tourism as a priority sector. The countries which have
taken this route are reaping rich dividends and for some their entire economy is depending on this industry. India has immense
potential in this sector, but it needs Governments attention and support. Budget, being one of the key financial action plans
for the Government, must have greater attention for this industry that it deserves.
Visit FHRAI Website: www.fhrai.com FHRAI MAGAzINE ApRIl 2012 13