Infrastructure can be given to the hospitality sector

The infrastructure situation for any sector provides incentives and exemptions, including cheaper credit, tax concessions and increased capital inflows. It also helps the sector to attract investments. A deduction of up to 40% can be availed on the income from financial investments on account of their investment in equity shares.

The officials cited above said that the ministry may take up the matter with the finance ministry and the Prime Minister’s Office (PMO) to reach a consensus on the issue. The talks come at a time when the hospitality business in the country has been badly hit by the pandemic and restrictions in the last two years.

A spokesperson of the Union Tourism Ministry did not respond to emailed queries till press time on Saturday morning.

The infrastructure position helps companies raise Viability-Gap Funding (VGF) and allows external borrowing. Currently, hospitality projects are classified as “infrastructure” projects only in cities with a population of up to 1 million.

According to industry analysts, the hospitality sector currently pays an interest of around 11%, which would be much less if infrastructure status is granted. The need for infrastructure status for hotels was emphasized in the draft National Tourism Policy released by the Ministry of Tourism in November.

Noting that housing is an important condition for the development of tourism, the draft policy states that if tourism in the country is to develop in both internal and domestic traffic, there will be a need to expand the accommodation facilities at the destination.

“Most of the hospitality infrastructure like hotels, resorts and convention centers are being developed by the private sector in the country. Public investment in hospitality infrastructure is very low. Investments in these hospitality projects require significant time to recover,” it said.

Hotel Association of India (HAI) general secretary MP Bezbaruah also said that the government’s tourism-related programs like ‘Dekho Apna Desh’ will be successful only when the hospitality sector grows. “Instead of the government, why not encourage the industry to invest and give them some incentives. Whatever little the government spends will be compensated by a hundred times higher returns from this sector,” Bezbaruah said.

He also said that if this step is implemented, it will be in line with the government’s thrust for capital expenditure and infrastructure development. Union Budget 2022-23 mainly focused on infrastructure development and estimated capital expenditure for FY23 7.5 trillion, 35.4% higher than the budget estimate 5.54 trillion for FY22.