After a bumpy ride in 2020 and 2021, which were severely impacted by the COVID-19 outbreak, the travel industry has bounced back and is benefitting from the pent-up demand. While it is in recovery mode, the sector is yet to reach pre-pandemic levels and expects to benefit from the Budget 2023.
Pandemic pangs
The COVID outbreak had led to a complete standstill of tourism activities, job losses and the industry saw big dents in its revenue.
"Covid set this sector back by a few years and we witnessed significant decline in profitability for companies, job losses and even business shutdowns," said Rajat Mahajan, Partner, Deloitte India.
Around 21.5 million people, involved in the industry, lost their jobs due to the three waves of COVID-19 that first hit the country in early 2020, Union Tourism Minister G Kishan Reddy told the Lok Sabha during Question Hour in March last year.
According to a study by the ministry of tourism, 14.5 million jobs were lost during the first wave, and 5.2 million and 1.8 million in the second and third waves, respectively.
"We are facing a shortage of manpower in the airline and hospitality sectors as many who lost their jobs during the pandemic have opted for alternative career options," said Sandeep Arora, Head of Brightsun Travel Private Limited, India.
The tourism economy was down significantly during the three waves of Coronavirus, which hit this sector severely —not only in India but across the globe, the minister had said.
He also pointed out that the tourist arrivals in the country were down by 93 percent during the first wave of the COVID-19 outbreak, 79 percent in the second wave and 64 percent during the third wave.
A Crisil Rating study in April last year had said that India's tourism and travel industry will see a full recovery only in FY24, and will reach 70 percent of pre-COVID levels in FY23.
Eyes on Union Budget
“While the industry is slowly recovering from the impact of the pandemic, it is concerned about the high GST rates on flights and hotels as well as the limited support from the government in the last budget," said Arora.
He said that international tourism has been pushed back by decades and international tourist arrival figures are still not on par with what it was in 2019.
"It is recommended that the government should formulate a well-defined procedure for refund of IGST (Integrated Goods and Services Tax) paid by the tourists leaving India on supply of goods taken out of the country as a part of the baggage. The exemption is significant as the industry is still in recovery mode,” said Alapati Krishna Mohan, managing director of Southern Travels.
Tourism services provided to the foreign nationals should be eligible for GST exemption, said Dhruv Shringi, Co-founder & CEO, Yatra Online Limited. He added that ATF (aviation turbine fuel) should be brought under the GST ambit to provide relief to the airlines sector.
A greater focus on the industry’s revival is required, which can be done by implementing e-visa fee waiver for tourist visas, and domestic income tax travel credit for Indian citizens and Indian companies, said Nishant Pitti, CEO and Co-founder, EaseMyTrip.
The travel and tourism industry is also demanding industry status to make the sector more structured.
Arora said that the travel sector needs government support and investment for the improvement of infrastructure at various tourist destinations.
"There are heritage sights and monuments that can help increase tourism in India but are unexplored due to poor infrastructure. The budget can work on redeveloping these sights, and the roads and make them better accessible," said Vandita Purohit, Founder of travel company TraWork.
After two tough years, the travel industry has bounced back and its back on track with increasing passenger numbers, said Liberatha Kallat, Chairperson & Managing Director, DreamFolks Services, an airport service aggregator.
She said that for this momentum to continue they expect the government to offer tax breaks in the upcoming budget to bring down the cost structure of airports and airlines. "Air travel tax cuts and exemptions will also help accelerate the industry's growth. IT deductions for domestic travel and tourism spending will help boost tourism, further enhancing domestic and international travel," she said.
To meet the growing travel demand in India the government needs to focus on increasing capacity, including a faster rollout of the next-generation Vande Bharat trains, said Dinesh Kumar Kotha, Co-founder & CEO, ConfirmTkt.
Corporates should be offered with incentives for organizing meetings and conferences in India through partial or full tax exemptions on the expenses incurred, said Vishal Suri, Managing Director, SOTC Travel Limited. "This will help boost domestic travel and tourism," he said.
Leave Travel Allowance (LTA) expansion to once a year against twice in 4 years will boost domestic tourism, said Mahesh Iyer, Executive Director & Chief Executive Officer, Thomas Cook (India) Limited.
Budget of 2022-23 had increased the tourism sector allocation by 18.5 percent, noted Ashish sidhra, Co-Founder at Alike.io. "There have been multiple policy interventions as well to enhance the growth velocity of this sector. We anticipate the government to build upon on this momentum in the upcoming budget. Specific areas that we would be eager to see some movement are around provisioning for 10 percent SEIS (Service Exports from India Scheme) combined with export status for forex earned for travel services."
Mahajan expects the government to extend the emergency credit line guarantee scheme by one more year to March 2024 for the tourism sector.
For intercity travel, Manish Rathi, co-founder and CEO, IntrCity said that the 'One India, One Permit' initiative, now needs to be pushed and all state governments should accept it.
Travel firms are also focusing on push for sustainable travel. "We need to move towards more sustainable forms of travel, while ensuring that the industry remains profitable. Introducing green tax incentives or providing subsidies to travel companies that are investing in green technologies would be great steps," Nitin Raj, CEO and Co Founder, Riverum.
Travel companies like M2M Ferries are seeking support for passenger's water transport. "We hope this year the budget will support this sector through relief and subsidies so that the end use can benefit for cost effective travel. India has a huge coastline and the potential is immense," said Aashim Mongia, Director, M2M Ferries.
"The tourism and hospitality industry expects more relief and supportive incentives from Budget 2023-24, especially considering the overall impact COVID-19 had on the industry," said Jurgen Bailom, President and CEO of Waterways Leisure Pvt Ltd.
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