As per the UNWTO Barometer, during 2015 India ranks 40th in terms of International Tourists Arrivals. As per the 2nd Tourism Satellite Account of India – 2009-10 and subsequent estimation for the next three years namely 2010-11, 2011-12 and 2012-13, the contribution of tourism to total Employment in the Country during 2009-10, 2010-11, 2011-12 and 2012-13 were 10.17 per cent, 10.78 per cent, 11.49 per cent and 12.36 per cent, respectively.
The FTVs during 2015 was highest in West (30.6 per cent) followed by South (29.1 per cent), North (28.4 per cent), East (11.4 per cent) and North East (0.5 per cent). As per the Report of the ‘Working Group on Tourism’ for the 12th Five Year Plan (2012-2017) set up by the then Planning Commission, the requirement of additional hotel rooms under classified category in 2016 over 2010 is estimated to be 1,90,108.
Construction of hotels is primarily a private sector activity. The Ministry of Tourism, however, has advised the State Governments/UT Administrations to follow tourism friendly policies for augmenting hotel room supply like allotting land sites for hotels on revenue sharing basis, granting extra Floor Space Index (FSI)/ Floor Area Ratio (FAR) for hotels, adopt Single Window approach for clearing hotel projects, rationalization of taxes, etc.
To encourage the growth of budget hotels, the following incentives were announced by the Government; Extension of Investment Linked tax incentives under Section 35AD of the Income Tax Act to new hotels of 2-Star category and above anywhere in India, which will facilitate growth of Accommodation in the country; The Reserve Bank of India (RBI) has de-linked credit for hotel projects from Commercial Real Estate (CRE), thereby enabling hotel projects to avail credit at relaxed norms and reduced interest rates; Hotel and Tourism related industry has been declared a high priority industry and Foreign Direct Investment (FDI) is allowed up to 100 per cent under the automatic route.
The Ministry of Finance, Government of India has also included the following in the “Harmonised list of Infrastructure Sub Sector” to boost supply of hotel rooms in the country; Three Star or higher category classified hotels located outside cities with population of more than one million; Hotels with a project cost of more than Rs.200 crore each in any place in India and of any star rating.
