Budget 2017: Highlights and reactions

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The Budget 2017, announced by Finance Minister Arun Jaitley, has outlined several developments and plans for tourism sector. Jaitley referred to tourism as a big employment generator and has announced that the government will set up five special tourism zones in co-ordination with state governments, alongside launching the Incredible India campaign on international level.

On tourism and related infrastructure front, the Budget saw several announcements for railways, aviation, road and coastal connectivity. Selected airports in Tier II cities have been identified for taking up operations and development under PPP model.

The government has also allocated Rs 1,840.77 crore to the tourism ministry for the next fiscal, including Rs 959.91 crore for the integrated development of tourist circuits. For the hospitality industry, the five per cent tax reduction applicable for all MSMEs, has been identified as a significant development.

Industry speak

One of the key wins of this budget has been the announcement to launch the Incredible India 2.0 campaign. We would eagerly await the formal plans and rollout of this much-awaited campaign. There is a huge market for cruises that India is missing out. The 2,000-km of coastal connectivity roads identified for construction and development in this Budget will facilitate better connectivity. The intent to skill India with various government programmes will definitely help to reduce skill shortage in the tourism industry.

Sunder G Advani, vice chairman, World Travel & Tourism Council, India Initiative (WTTCII) and CMD, Advani Hotels & Resorts (India)

The tourism industry welcomes this budget. We see substancial increase in budget allocation for the travel and tourism industry. The finance minister also said that exports are not increasing. I would like to highlight that tourism can play a crucial role to improve this situation. Also, the budget allocation for commerce sector – which contributes to an important amount of our business – has been reduced, but we will hold discussions with the government in the future.

Sarabjeet Singh, vice chairman, Federation of Associations of Indian Tourism & Hospitality (FAITH)

Budget 2017 proposes to lay a brighter road for the hospitality segment with the announcement of the Incredible India 2.0 campaign. We welcome this move as it will enable the hospitality and tourism sectors collectively serve the increased inflow of tourists. The announcement of setting up five special tourism zones will also attract more traffic. These special tourism zones would be created as Special Purpose Vehicle (SPVs) in connection with the state government which again is a positive move for the industry and indicates a high potential of increase in job opportunities. Extending tax holidays for start-ups upto three years of the first seven years will attract more entrepreneurs to the hospitality sector. Overall, the budget would bring back the lost sheen to the segment.

Aji Nair, chief operating officer – F&B division, Mirah Hospitality

Proposed relaxation in labour laws is also likely to provide relief to the labour-intensive sector. The tourism and hospitality sector would need greater support from the government to thrive in an increasingly competitive domestic as well as international markets.

Jaideep Ghosh, partner and head – tourism and hospitality, KPMG India

Based on the government’s vision for tourism and our hopes were to receive the much needed reduction in taxes which would come into effect in the GST roll-out later this year. Also we had hoped that the government would grant infrastructure status to hotels with a project cost of Rs 25 crore as against the present Rs 250 crore. But there has been no mention on any of the critical aspects for promoting tourism.

Dilip Datwani, president, Hotel and Restaurant Association of Western India (HRAWI)

This Budget has taken several measures to boost the travel and tourism industry. The industry was however, keenly looking forward to a stronger government focus on incentives for the commercial real estate sector such as listing of REITS, changes to the Real Estate Regulatory Bill and creation of single-window clearances besides according infrastructure status to the hospitality industry. We now look forward to the implementation of GST such that all taxes are streamlined for the long-term benefit of the country.

JB Singh, president and CEO, InterGlobe Hotels

For the hospitality industry the only take-away from the Union Budget 2017 is the five per cent tax reduction which is applicable for all MSMEs. Other than that, the government has announced plans to establish five tourism zones in the next financial year with special purpose vehicles (SPV) set-up. There is no clarity on what or where the government plans to execute this project. Despite acknowledging tourism’s potential in creating a multiplier effect for the economy, the finance minister has not really marked out anything significant for its promotion.

Kamlesh Barot, past-president, HRAWI

GST focus

In another highlight following Jaitley’s budget announcment, HRAWI organised a training session for hospitality establishments, in Mumbai. The session was led by advocate Anil Harish from DM Harish & Co, who explained the current tax regulations under the Income Tax Act, 1961 and the amendments announced by Jaitley in Budget 2017. Harish also focused on the changes to happen, once GST comes into force.

He said, “The finance minister stressed on ease on doing business; India ranks low among other countries in the list of ease of doing business. Also, the infrastructure status is relevant for hotels, but this has not been given yet. I urge HRAWI to address this topic to the government.”

Sunit Kothari, director of hotels and real estate developer Kothari Group, added, “It was a golden chance for the government to announce provisions for hospitality sector, but one more year has been wasted. Our pre-budget memorandum hasn’t found necessary appreciation. We hope next year the government revives the subsidies for setting up hotels, which was previously in force.”

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