By SarabJit Singh,
Managing Director, Travelite (India) a unit of KTC India Pvt Ltd., Former Sr. Vice President of Indian Association of Tour Operators and Founder & Former Vice Chairman, FAITH.
The Coronavirus pandemic has disrupted the world order that’s been in existence. It has challenged the world anew on several fronts, including economy and employment. India faces a more daunting task on these two fronts.Tourism sector, due to its nature of business is the first one to be impacted and last one to recover. It will be a huge challenge to save not only investment but also jobs in this sector.
Between 2008 and 2019, the tourism sector in India has clocked annual y-o-y growth of just about 6.5 per cent despite a very low base. In comparison, Thailand has grown from 14.5 million arrivals in 2007 to 40 million in 2019 and Turkish tourism has risen to 52 million in 2019 from the base of 8 million in the year 2000. In both the countries government created a friendly environment for investment in tourism and policies to welcome tourist from all over the world.
The question is, can it be replicated by India with its vast appeal for tourist that offers unmatched natural assets, culture, diversity, history of the oldest civilisation etc. The answer is an emphatic YES. However, for this to happen the government will have to rethink about tourism and bring desired changes by sincerely engaging with the private sector at the soonest.The country can emerge stronger than before and that can happen sooner than later with new innovation, policy reforms and incentives.
India, in comparison to the competing destinations, is an expensive destination for the tourist and one of the main reasons is taxes which works out from 18% to 23%.Whereas other countries’ tax impact varies between 0 to 7 per cent only.
Government must bring the inbound tourism activities through recognized tour operator to zero tax rating level to minimize the impact on revenue.As pilot, the exemptions may initially be restricted to tourists travelling through recognised tour operators who have paid for the services in foreign exchange through banking channels.
Tourism exports need to be treated at par with merchandise exports and further strengthened with a scheme similar to that of RoDTEP (Remission of Duties or Taxes on Export Products) in order to spur the private sector to undertake ambitious tourism marketing in overseas markets, grow country’s tourism receipt and boost employment opportunities.
The merchandise exports are exempted from all taxes and local duties. In addition, the Government of India has approved a new scheme RoDTEP where even those taxes and duties paid by the goods exporters which are not exempted under any other scheme have been exempted. The reimbursement of taxes under RoDTEP covers value added tax, mandi tax, coal cess, electricity duties and tax on fuel used for transportation etc.
These exemptions must be provided to tourism exports as well that in turn will provide tourism enterprises some liquidity to restart operations. Schemes to boost tourism exports on the lines of RoDTEP will not only create a level-playing field for Indian operators in a highly competitive international market but will also spur these enterprises to spend and invest more in order to market and promote India.Furthermore such a scheme would also attract new players to invest into the sector and that in turn will further accelerate India’s tourism exports and revenue growth.
Over the past few years the actual growth in the tourist arrivals is due to the increase in numbers from the countries like Bangladesh & Afghanistan, whereas high yield tourist markets are either showing decline or marginal growth only.
The first task will be to bring back the tourist arrivals to the pre-Covid level which was about 11 million in 2019. Going by our track record it may take 3 to 5 years. It is now imperativefor the government to take some bold decisions for the tourism sector at the earliest.
Tourism is essentially a private sector driven activity.Tourism enterprises have made all the investment and are doing their best to promote India as a tourism destination worldwide. The time has come when the government brings in and closely engages with the private sector to chalk outplans and policy for promotions and overseas marketing.
Worldwide, international tourist arrivals have plunged 93 per cent in June and 65 per cent in the first half of 2020. According to UNWTO, Asia-Pacific is the hardest hit. We are looking at an unprecedented decline in international tourist arrivals with as much as three-quarter of the last year numbers being wiped out to the pandemic with an estimated loss of well over US $ 20 billion in visitors impact or tourism exports.We cannot do anything about it this year, but with right measures we can surely engineer a swift recovery plan and strong future growth.
