The Government wants the Services exports share to reach US $ 1 trillion of India’s overall GDP by the year 2030. If this is to happen, India’s tourism receipt will need to grow to at least US $ 100 Billion, which is more than three times the pre-pandemic (Year 2019) level, and the same growth applies to FTA (Foreign Tourist Arrivals) numbers. In 2019, India recorded close to 11 million FTAs generating a tourism export revenue of about US $ 29 Billon.
The question arises is that do we have it in us, as an industry as well as as a destination, to achieve this target? Or, is it a possible target? The answer to all such questions is an unequivocal Yes! But why we have not been able to deliver such results in the past is the ‘absence of collective and cohesive approach.’ This is the crux of all the reasons.
Now, if we must achieve this target, there are certain things that the Government must do.
1. Worldwide, tourism is private sector driven business. All the promotional activities are carried out by the private sector, fully funded by the Government, and the same approach needs to be applied in India too. This means that the private sector needs to be given the lead to plan and execute every possible marketing and promotional activities for India tourism, right from attending international tourism fairs, organizing road shows across the world to hosting tourism exhibition in the country, bringing in foreign tour operators and travel writers and journalist, and more.
Government can give these tasks to either FAITH or can create an industry led Tourism Export Promotion Council (TEPC) on the lines of SEPC to handle these affairs duly following all the CAG law and regulations. Briefly put, trust the industry, the private sector, with the responsibility to drive India’s inbound tourism growth.
2. There is a need in the inbound tourism sector today of a comprehensive scheme to grant financial support to foreign tour operators for brochures, marketing, seminars as well as advertisement, whether digital or print. Emphasis should be made to make available such payments in a time bound manner and not in six months or a year as is the norm. Inordinate payment delays tend to turn off the foreign tour operators. As a result, they drop such destination from their itineraries and packages and the country loses significant potential tourism business.
There is a lot of potential pent-up demand across the world because of the pandemic induced restrictions on international travel. And with the pandemic, and the resultant restrictions on cross-border travel, on the wane, we need to move quickly to take advantage of this latent demand. For this to happen, we need to extend marketing support to the Foreign Tour Operators (FTO) who are themselves in no better conditions than we are. The destinations that reach out to these FTOs first, with financial support for their marketing activities, will benefit the most and others will be left out.
3. Government must consider refunding total GST paid by tour operators from foreign exchange earned through tourism, conferences and trade exhibitions in India. Tourism exports needs to be treated at par with goods exports. Goods exporters get total refund of GST payments. The only difference between the two is that in case of tourism exports, unlike merchandise exports, the consumption of services is happening in India. We need to look at the much impactful tourism benefits in terms of its socio-economic dividends for the country and do away with these unnecessary definitions in the tax policies. They are dragging down the growth. With the GST refunds factoring in our cost and profits, this will bring down the cost of tours to India and give Indian tourism products much needed competitive edge in the international marketplace.
4. Tour operators need to be given liberal marketing support. MDA scheme of Ministry of Tourism has a lot of restrictions, like the ones on turnover limits or related to time from the date of travel, and one can barely take advantage of the scheme. Such wholehearted and facilitative marketing support will only help the industry unlock potential new markets and incremental tourism business for themselves and the country.
5. Government must seriously consider providing at least 3 per cent of the 2019-20 foreign exchange earned by tour operators back to them strictly for undertaking overseas marketing and promotional activities. This can be done in a staggered manner to ensure compliance and accounting.
6. There is a strong need to ‘identify’ the stakeholders undertaking tourism services exports. Inbound tour operators are the only stakeholders directly responsible to promote and market India through their tourism offerings and very importantly, also provide business to a whole lot of sub-sectors in the tourism value chain, from airlines, hotels, convention centres, tourist transports, F&B outlets to souvenir shops, malls and markets, handicrafts emporium and what not. Others, like airlines or hotels, are service providers. Therefore, incentives or GST refunds should be limited to tourism services exporters only who are the recognised inbound tour operators.
7. Under the EPCG (Export Promotion Capital Goods) scheme, the tour operators need to be allowed to import high-end electrical vehicles. These are not available in the country for the next few years. While at the same time, the requirements of electrical vehicles, whether demand from tourists, Government or visiting state guest and such dignitaries, are only increasing.
By SarabJit Singh, MD, Travelite (India); Former Sr. VP, IAO & Former Vice Chairman, FAITH.
(As told to Shayan Mallick)
