Before the presentation of the Union Budget 2023-24 by Finance Minister Nirmala Sitharaman on February 1, 2023, the travel, tourism, and hospitality sectors expressed their demands that included tax relaxations & benefits, infrastructure status, and incentives, and more.
T3 brings together the industry’s reaction to the Budget 2023-24.
Nandivardhan Jain, CEO & Founder, Noesis Capital Advisors
“The Union budget has shown positive signs for the Hospitality, Travel, and Tourism industries, the Union Finance Minister Nirmala Sitharaman has encouraged the states to set up a ‘Unity Mall’ in the state capital or at an attractive tourist destination in the state for the promotion and sale of ‘One District, One product’ (ODOP) and Geographical Indication (GI) products along with other handicrafts.
While the Minister announced 50 tourist destinations will be selected and developed as a whole package for domestic and international tourism, the overall development with this vision is an impetus to the sector. The FM Sitharaman stated, “Dekho Apna Desh’ initiative was launched by the Prime Minister to the middle class to prefer domestic tourism over international tourism whereas ‘Swadesh Darshan Scheme’ was launched for integrated development of theme-based tourist circuits”.
Moving towards, emboldening the active participation of states, convergence of government programmes and public-private partnerships. The future seems bright and an exciting one with 50 additional airports, and helipads to be revived to increase connectivity with the budget of 3,114 crores to the union civil aviation ministry. This will further increase the passenger movement and boast the hotel room inventory across the region which will increase employment opportunities and parallelly uplift the community, promoting sustainable tourism.”
Rajesh Magow, Co-Founder and Group CEO of MakeMyTrip
“It is noteworthy that the Honorable FM has highlighted tourism as a focus area. The union budget entails multiple welcome initiatives like the revival of 50 airports, the building of 50 new destinations, and high budgetary outlays on railways, roads, and highways, which will help long-term growth for the domestic travel and tourism industry.
However, one budget proposal that will negatively impact the industry is the move to increase the TCS mandate from 5% to 20% on overseas tour packages. This will not only increase the upfront cash outflow for customers but will also give an unfair advantage to foreign-based online travel booking platforms over India-based travel agents and tour operators.”
Chander Baljee, Chairman & Managing Director, Royal Orchid & Regenta Hotels
“The focus on ‘Bharat Dekho’ is commendable as this is an initiative that will push Indians to explore India and see their own country like never before. However, there are several areas, especially in the hospitality industry that have been missed. There are no loans for long terms as well as no industry status which has been our request for years.
Though, tourism has been recognized as one of the drivers for the economy, yet, the suggested 50 additional airports will certainly help the industry but will take another 3-5 years to be built. The same can be said for the 50 tourist destinations that will be selected. This will take a very long-time, maybe even five to 10 years before completion.
In my view, more prominence has to be given to our industry. There should be more focus on the connectivity of airports, especially from the city centers by road or metro. Tourist places should basically have clean and hygienic toilets, which should be permitted especially where the archaeological departments do not permit it. Finally, instead of food stalls at tourist destinations, there should be proper food courts and parking facilities.”
Nishant Pitti, CEO and Co-Founder, EaseMyTrip
“A new chapter in India’s travel and tourism industry is set to begin as the Budget 2023 announcement comes to a close. The positive outlook for the industry displayed by FM Nirmala Sitharaman early on in her speech is highly commendable, taking up the agenda for promoting tourism in the country on “mission mode,” and will play a vital role in reviving the landscape of tourism in India.
The initiative to provide additional infrastructural support with fifty new airports, heliports, water aerodromes, and advanced landing zones in India, along with the simplification of registration and overall regulations under the GIFT IFSC will pave the way for new entrants in the aviation industry, which has experienced increasing demand both domestically and internationally.
Theme-based tourist circuits and the introduction of ‘unity malls’ by states to promote locally manufactured goods is yet another move that will result in revitalizing the tourism industry, along with providing multiple opportunities for employment generation and entrepreneurship. Moreover, the introduction of the new Income Tax slabs will avail newer and better opportunities for people to travel and discover India’s rich diversity.”
Rikant Pittie, Co-Founder, EaseMyTrip
“One of the striking features of today’s Budget 23 announcement was the echoing of India’s global recognition as a powerhouse of entrepreneurship and innovation. This was mirrored in the government’s initiative to support the vibrant ecosystem by extending the date of incorporation for income tax benefits from 31 March 2023 to 31 March 2024. This will provide an opportunity for several startups to flourish, especially in the travel and tourism industry, which are yet to recover from the blows that were dealt during the pandemic.
The foresight shown with the proposal of extending the benefit of carrying forward of losses on change of shareholding of startups from seven to ten years, along with an enabling regulatory framework introduced by developments in GIFT IFSC will further provide employment and entrepreneurial opportunities within the tourism industry, and provide an impetus to budding entrepreneurs in the space. With the commencement of India’s Amrit Kaal, the future of India’s startup ecosystem appears bright, and the travel and tourism industry is all set to play a major role in the economy’s development”
Ritesh Agarwal, Founder & Group CEO, OYO
“The budget presented by Hon’ble Finance Minister Nirmala Sitharaman offers a roadmap for the holistic development of the nation, as we enter ‘Amrit Kaal’. It sets India up as the Startup Nation for the decade.
Increment in the capital investment by 33% in infrastructure and Urban Infrastructure Development Fund (UIDF) will have a multiplier effect. Announcing a capital outlay of INR 2.40 lakh crore for the railway sector, addition of 50 airports, heliports, water aerodromes, and advanced landing grounds will further provide impetus to overall infrastructure, leading to improved connectivity across the country and enhancing domestic travel and tourism.
It is heartening to see the extra emphasis given to tourism this year. The FM has identified tourism as one of the key sectors, with huge potential to generate employment for the youth, and reiterated government’s commitment to promote tourism on ‘mission mode’.
We welcome the move to develop 50 cities across India as a complete package for domestic and international tourism, and developing an app to ensure all the key metrics related to travel and tourism for the said cities are regularly updated. We also laud the move to incentivise states to set up ‘Unity Malls’ in their most popular tourism destination for promotion of GI, ‘Made in India’ products and handicrafts. Integrated development of theme-based tourism circuit under the ‘Swadesh Darshan Scheme’, with special focus on improving infrastructure and amenities in border villages will provide a much-needed boost to rural and agriculture tourism. This will empower the farmers in building and setting up homestays that provide an additional source of income for them while also providing an authentic Indian experience to the travellers.
Another commendable move is the sector specific upskilling and development to achieve the objectives of ‘Dekho Apna Desh’ initiative launched by PM Modi last year. This will encourage the youth to take up a career in tourism and hospitality, and further strengthen the growth of the sector.
In recent years, the start-up ecosystem in India has expanded rapidly to emerge as a major driver of economic growth. The finance minister’s proposal to extend the date of incorporation for income tax benefits to start-ups by another year is bound to further that progress and promote new entrepreneurial talent. The decision to provide the benefit of carry forward of losses on change of shareholding of start-ups from seven years of incorporation to 10 years is another welcome move.”
Vishal Suri, Managing Director, SOTC Travel Limited
“The Union Budget 2023-24 presented by Hon’ble Finance Minister provides a positive focus on infrastructural development/investment, digital enhancements, sustainability, agriculture, domestic tourism. We appreciate the Government’s plan of continued focus on domestic tourism, railways, new airports, heliports, water aerodromes that will improve regional connectivity and be one of the key drivers of the domestic tourism sector.
Further, the announcement on the launch of an app to enhance domestic tourism experience reiterates our country’s focus on digitization. The ‘Dekho Apna Desh’ initiative focusing on sector specific skilling and entrepreneurship development while the facilitation of tourism infrastructure under the Vibrant Villages Programme, and setting up a ‘Unity Mall’ in state capitals/ popular tourist destinations to promote ‘One District, One product’ for GI products and other handicrafts will strongly support domestic tourism.
The travel & tourism industry supports one in 10 jobs and provides livelihoods for a significant number of people, therefore the Government’s support on prioritizing tourism with active participation from local authorities, sustainable practices and encouraging public-private partnerships is a positive pivot towards revival/road to recovery.
However, this Union Budget did not provide the travel & tourism industry the respite we anticipated with respect to rationalization of taxes. Instead, the proposals increased TCS on outbound travel and other LRS transactions from 5% to 20% without any threshold exemption. In our view, such high rates of taxation are an added liability to outbound travelers and negatively impacts tour operators recovering from the pandemic. We request the Government to reconsider this proposal.
We also hoped this budget would offer elimination of the 5 crore capping for the SEIS benefit and incentives to Corporates for organizing meetings and conference in India through partial or full tax exemptions“
