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Coronavirus blow: Hospitality, tourism activity worth Rs 5 lakh crore to take a hit

The larger tourism industry in India is estimated to contribute to about 10 per cent of the GDP (approx $275 billion).  

Published: 20th March 2020 11:52 AM  |   Last Updated: 20th March 2020 11:52 AM   |  A+A-

Tourists wearing masks at the India Gate in New Delhi on Sunday. (Photo | Anil Shakya, EPS)

Express News Service

NEW DELHI: The tourism industry is in dire straits due to the pandemic coronavirus which continues to spread its tentacles across the globe. According to the Federation of Associations in Indian Tourism and Hospitality (FAITH), direct tourism activity in excess of Rs. 5 lakh crore, including foreign inflows, is at risk. 

“With declining revenues almost all tourism businesses are running out of working capital. A large percentage of total tourism business activity of India, which is estimated at above $28 billion in forex and upwards of Rs 2 lakh crore in domestic tourism activity will be at economic risk through the year," FAITH stated in a letter to Prime Minister Narendra Modi, seeking government intervention to aid the bleeding sector. 

"Thus, in excess of Rs 5 lakh crores of direct tourism industry and almost double that of total economic activity is at risk,” it added. 

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The nodal agency and policy federation of all national associations representing the tourism, travel and hospitality industry also wrote that the sector is staring at bankruptcies, business closures and mass unemployment.

“It is believed that around 70 per cent or 3.8 crore out of a total estimated workforce of 5.5 crore (direct and indirect) could get unemployed. This effect of job losses and layoffs has already begun throughout the country,” it stated. 

The signatories in the letter include Nakul Anand, executive director, ITC and chairman of FAITH, Indian Hotels Company Ltd CEO Puneet Chhatwal, Pronab Sarkar, president, Indian Association of Tour Operators and PP Khanna, president, Association of Domestic Tour Operators of India, among others. 

Among other suggestions, the tourism and hospitality body has requested include: Twelve months moratorium on EMIs of principle and interest payments on loans and working capital from banking and non-banking institutions, doubling of working capital limits on interest free and collateral free terms, set up a support fund for twelve months on the lines of MNREGA to support basic salaries with ‘direct transfer’ to affected tourism employees and a complete GST tax holiday for the tourism, travel & hospitality industry for a period of twelve months.

“With nearly nil revenues there is hardly going to be any GST collection. This will will promote both domestic and inbound travel,” it stated.

It further stated that tax collected at source (TCS) on travel has been proposed in Finance Bill 2020 to be levied from April 1. 2020 is waived. “We request that it not to be introduced as it will displace business from India to overseas, which will lead to shutting down businesses of most Indian tourism companies,” the letter noted. 

FAITH has sought for a deferment of twelve months for all statutory dues like advance tax payments, PF, ESIC, customs duties at the central government level or at any state government level, the excise fee, levies, taxes, power and water charges, bank guarantees and security deposits and deferment of all renewals, across the tourism, travel, hospitality and aviation industry.

A 200 per cent weighted exemption for 12 months on expenses incurred by corporates on holding exhibitions, conferences and incentive trips in India should also be considered, it noted.

The larger tourism industry in India is estimated to contribute to about 10 per cent of the GDP (approx $275 billion).  

According to Hotelivate, a hospitality consultancy firm, the Indian hospitality industry is believed to be staring at a collective loss of more than Rs 620 crore. Nearly 1.4 lakh organised hotel rooms across India and standalone hotel segment is staring at losses over Rs. 130-155 crore, the alternate accommodation segment, dominated by Bed & Baths and guest houses, is likely to make losses of over Rs. 420-470 crore.

In an impact assessment of the coronavirus pandemic, CII Tourism Committee said inbound foreign tourism of over $28 billion in value terms accounts for an average 60-65 per cent between October to March.

"The forward bookings for the inbound season of October 2020-March 2021 which should have started picking are all muted. These are showing highly discouraging signs with cancellations of important global travel marts which are marketplaces for contracting for the next season," said Dipak Haksar, chairman of CII's National Committee on Tourism and Hospitality, adding the holiday season of April-July is likely to take a humongous hit.

CII also recommended the government release of SEIS and EPCG schemes on an urgent basis based on last year's submissions of foreign exchange earnings of companies at an enhanced rate of 10 per cent, GST refunds on MICE cancelled events, a six to nine months' moratorium on all working capital principle, interest payments on loans and overdrafts bringing in liquidity, for the revival of the sector.



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