In her budget presentation today, Finance Minister Nirmala Sitharaman outlined new initiatives to bolster India’s tourism sector, focusing on the development of key destinations like Nalanda, Gaya, and Odisha. However, travel trade associations expressed significant disappointment, noting the absence of targeted measures addressing their key concerns. Prior to the budget announcement, the industry had collectively requested increased funding for domestic and international marketing, infrastructure status for the hospitality sector, solutions to TCS and GST issues, and various incentives and rebates. But none was taken up as a priority besides repeated requests. According to association representatives, addressing these requests could have significantly bolstered India’s economy and multiplied job opportunities.
T3 presents a compilation of post-budget reactions.
‘Lack of budget recommendation to boost India as global tourism hub’
Aashish Gupta, Consulting CEO, FAITH (Federation of Associations in Indian Tourism & Hospitality) expresses,“While it is encouraging the FM announced that India has the potential to become a global tourism hub, it would also have been nice to see budget recommendation supporting the same, such as an increase in the marketing and publicity budget, infrastructure status support to hospitality, abolishment of TCS on travel and reduction in GST rates on tourism travel and hospitality. The support given to spiritual tourism through corridor development and cruise tourism through tax adjustment on foreign ships in Indian shores will support these sub sectors. There was the potential for this budget to address a lot more opportunities for growth in Indian tourism in a structured manner.”
‘Left with no choice but to be Atmanirbhar’
Ajay Prakash, President, TAFI (Travel Agents Federation of India) shares thatthe travel industry has been left high and dry. “We have been told once again that we have no choice but to be Atmanirbhar.” He further added that the Finance Minister mentioned tourism as a major subject and ultimately offered – the development of corridor and upgrading the temples of Gaya, Bodh Gaya and Rajgir; the revival of Nalanda university; and some assistance to Odisha in developing its sanctuaries and beaches. But none of the issues that plague the industry are addressed, whether its GST or TCS or others.
“The onus falls on the agent if the department discovers that there is a short collection. We had raised these issues, but unfortunately none of these issues have been addressed. The marketing budget for overseas promotion remains unchanged at 3 crores, which is a ridiculous figure. There are no sector-specific incentives, inducements or anything at all to promote this industry, so that we can talk about the potential of tourism, and this will remain unrealized if this is the attitude that the government has. Mere creation of infrastructure does not automatically lead to an increase in tourism, and we need much more than that”, adds Prakash.
‘Travel Trade in India receives zero-response from Government of India’
Expressing disappointment, Jyoti Mayal, President, TAAI (Travel Agents Association of India) shares, Nirmala Sitharaman today in her Budget speech once again ignored the Travel Trade in India. TAAI which had sent pre-budget requests to the FM, is totally shocked at the zero-response received from the Government of India. Despite being one of the key drivers of economic growth and employment, the sector has been notably underfunded and overlooked in the latest budget, stated TAAI President.
“The FM in her speech highlighted infrastructure development for only two to three religious locations and circuits which are totally raw and need a huge push. Rather than upgrading the current locations and enhancing last mile connectivity to popular locations the Govt. is trying to push locations where connectivity is a huge challenge and there is lack of interest in the Domestic as well as the inbound tourism market.”
She further adds that the requests for reduction in Aviation Turbine Fuel (ATF) was not considered which would reduce the airfares and increase the growth in the number of travellers. The requests for rationalisation of GST Rates for inbound, outbound as well as domestic travel also was ignored.
TAAI has made multiple demands to permit GST input credit for interstate hotel rates, alongside abolishment of TCS on outbound travel which is hindering the ease of doing business for Indian travel agents/tour operators. “Further in our request to promote e-commerce for travel agents and tour operators simplified and reduced TDS rates have also been un-noticed by the FM while presenting the Finance Budget for 2024-25”, adds Mayal.
TAAI also appealed Government of India to place the Travel and Tourism Trade, specifically the travel agents and tour operators in the concurrent list and provide rebates to the trade as a result grant industry status. TAAI also requested for simpler and reduced taxes for foreign shipping companies operating and visiting India to boost inbound tourism through cruises. According to Mayal, the budget falls short in launching robust campaigns to boost domestic tourism, which has become increasingly crucial in the current global context.
“The financial budget presented by the Finance Minister has significant gaps that could hinder the growth and recovery of the travel and tourism sector. Addressing these issues with a more comprehensive and supportive approach is crucial for unlocking the full potential of India’s tourism industry and ensuring its sustainable development.”
‘Nothing to facilitate development of hotels & promote inbound tourism’
K.B Kachru, President, Hotel Association of India (HAI) also expresses that the continued focus on government spending on infrastructure development augurs well for the sector. Improved infrastructure would translate into better connectivity which will be beneficial to the promotion of tourism. According to Kachru, the development of the eastern region especially Odisha, temple corridors in Gaya / Bodhgaya, Rajgir and identification of Nalanda as a key tourism site continue to demonstrate the government’s intent to utilize the potential of tourism.
“Regrettably, however there has been no policy announcement to facilitate the development of hotels and promotion of inbound tourism. The announcement of GST simplification, comprehensive review of the Income Tax Act provides some hope for the sector that has been seeking rationalization of taxes. The benefits to individuals on taxation will augment the spending power. The focus on skilling and incentivizing employers for creating jobs are other positives that will benefit all sectors”, adds Kachru.
He further adds that although not directly linked to this budget, the industry would continue pursuing it’s ask for grant of infrastructure status for the hospitality sector and industry-related benefits by all state governments.
‘Does not fully meet the high expectations set by previous promises’
“I am bit disappointed with the 2024 budget. Despite the promises, the actual measures, such as the limited tourism announcements and the increase in the standard deduction limit, don’t seem to align with the ambitious roadmap that was expected. Govt is moving in a direction to boost up the economy by not lowering its tax structure”, shares PP Khanna, President, ADTOI (Association of Domestic Tour Operators Association of India).
Some key aspects mentioned by Khanna are – announcements focused on developing tourism corridors, particularly in Bihar aim to boost local economies and create jobs, though details seem limited; increase in the standard deduction limit from ₹50,000 to ₹75,000 provides some relief for taxpayers but may not significantly impact overall tax savings for many individuals; the budget was expected to be a comprehensive roadmap for the next five years but appears to lack substantial long-term strategies. “Specific sectors, such as tourism, received attention, but the initiatives may seem insufficient in scope. General sentiment is that the budget does not fully meet the high expectations set by previous promises”, mentions Khanna.
‘Employment generation, development on skill & religious tourism are silver linings addressing critical challenges’
Although the budget falls short of expectations for transformative changes, FHRAI acknowledges the positive focus on infrastructure, rural development, and skill enhancement. Pradeep Shetty, President, FHRAI (The Federation of Hotel & Restaurant Associations of India) adds, “The commitment to develop iconic cultural sites and promote diverse forms of tourism is commendable and holds promise for attracting a broader range of domestic and international visitors”
In his opinion, the hospitality sector is disappointed but not dejected as the overall focus on infrastructure development, employment generation and skill development and development of religious tourism centres are the silver linings which will help the sector to tide over some of the critical challenges that it faces today. The industry has been facing a shortage of skilled workforce, especially in the hospitality sector.
The government’s proactive perspective on enhancing tourism, particularly through the development of spiritual and cultural landmarks like the Vishnupath temple in Gaya and Mahabodhi temple in Bodhgaya is a commendable move that promises substantial economic and social benefits. Furthermore, the development plans for Rajgir and Nalanda represent a significant investment in promoting India’s ancient historical and educational legacy. The government’s commitment to supporting tourism in Odisha is said to not only highlight Odisha’s unique attractions but also encourage sustainable practices that preserve the state’s ecological balance and cultural heritage.
With investments in infrastructure and specific funding for rural development, there are expectations to boost domestic travel in India and cater to the rising demand among Indians to explore the diverse landscapes and cultural richness of their homeland.
“It is also laudable that the FM’s Budget speech highlights the Governments’ commitment to make India a premier global travel destination through targeted investment and strategic initiatives. Development of iconic spiritual sites along with promotion of cruise and beach tourism can be helpful in attracting both domestic and international tourists” adds Shetty.
‘Inbound tourism seems to have been totally ignored’
Rajiv Mehra, President, IATO (Indian Association of Tour Operators) shares, “We are totally disappointed with the budget announcement. We had given multiple recommendations with regards to boosting inbound tourism, but they seem to have been totally ignored or not taken up.”
He further adds, “It hurts more as the governments stated objective is to give a boost to employment generation, and there is no industry that comes closer to it in terms of potential of employment generation.”
‘No provisions addressing the needs of the outbound tourism sector’
Highlighting lack of focus towards outbound tourism, Riaz Munshi, President, OTOAI (Outbound Tour Operators Association of India) mentions that “While we appreciate the initiatives outlined for the promotion of domestic tourism, we are disappointed to note that there were no provisions addressing the needs of the outbound tourism sector. Our industry had hoped for a reduction in GST and TCS to make international travel more affordable and competitive, which would have significantly benefited our members and the broader industry. Unfortunately, these critical aspects were not addressed, leaving our concerns unaddressed.”
OTOAI urges the government to consider the importance of the outbound tourism sector, as it significantly contributes to the growth of the Indian economy and foreign exchange earnings.
‘What we have on ground is more welcoming than starting new initiatives’
Tejbir Singh Anand, Sr. Vice President, ATOAI (Adventure Tour Operators Association of India) mentions that the Indian travel trade would have been much happier if the existing stake holders benefitted from the announcement.
“Consolidating what we have on the ground would have been more welcoming than picking up new threads. India as a travel destination for the world traveller has been royally ignored like always and I don’t understand why?”, adds Anand.
A low tax regime for the Indian tourism stakeholder would have been more welcoming than to a foreign cruise operator, which is a high hanging fruit and it will take some time before the cruise ports infrastructure can come up of international standards in India, states Anand. “What is interesting is that all inputs from the travel trade association and think tanks are neither welcomed not actioned even if we propose something to the FM. Allocation for developing new airports & roads are welcome but more burning issues such as TCS and GST have not been touched upon. Focus on skilling is welcome but strengthening the tourism entrepreneur is most important”, shares Anand.
‘The budget to enhance spiritual & historical significance, drive economic growth & create employment opportunities’
PHD Chamber of Commerce and Industry (PHDCCI) extends support to the 2024 Union Budget, referring the budget to play a pivotal role in bolstering India’s cultural heritage and economic growth, with a strategic vision to elevate India’s status as a leading global tourist destination.
Anil Parashar, Chair – Tourism & Hospitality Committee, PHDCCI, expresses, “We commend the government’s visionary approach in recognizing the immense potential of India’s tourism sector. The development plans for the Vishnupath and Mahabodhi temples, as well as Rajgir and Nalanda will not only enhance the spiritual and historical significance of these sites, but also drive economic growth and create employment opportunities. This budget is a significant step towards making India a top global tourist destination.”
Rajan Sehgal, Co-Chair – Tourism & Hospitality Committee, PHDCCI, also adds that the focus on advancing tourism in Odisha and other culturally rich states is highly commendable. “By improving tourism infrastructure and promoting our diverse natural and historical attractions, we are poised to attract global tourists, thereby boosting local economies and fostering sustainable development. Simpler tax regime for foreign cruise companies for operating domestic cruise vessels in India will promote cruise tourism”, adds Sehgal.
(Compiled by Kuhelika Roy Choudhury)
