Industry body proposes Rs 50,000 crore fund, declaring FY21 tourism tax freeby Nirbhay Kumar
In a letter to Tourism Minister Prahlad Singh Patel, FAITH Chairman Nakul Anand has said that viable tourism business will not restart for almost 15 months after the lockdown is lifted
- Industry lobby group FAITH has proposed a comprehensive package of Rs 50,000 crore fund, and declaring FY21 as tourism tax free year
- Rs 3 lakh crore collateral free loan announced by the government encouraging for conventional MSME enterprises, says FAITH, but may not help most tourism enterprises
- FAITH has proposed to extend moratorium on loans from the current 6 months to 12 months
Proposing a mega package for the crisis-hit tourism sector, industry body Federation of Associations in Indian Tourism & Hospitality (FAITH) has suggested to declare FY21 as tourism tax free year and set up a Rs 50,000 crore dedicated fund to help firms survive the cataclysmic impact of coronavirus.
The industry lobby group has proposed a comprehensive "Tourism Aid & Restructuring Package (TARP)" comprising six steps to address both supply and demand issues facing the sector.
In a letter to Tourism Minister Prahlad Singh Patel, FAITH Chairman Nakul Anand has said that viable tourism business will not restart for almost 15 months after the lockdown is lifted.
Demanding stimulus and a flurry of incentives, Anand has said that tourism sector will be the last sector to start in full and that too only after vaccine for coronavirus is developed.
"This is once in a generation crisis for tourism and thus our measures proposed too have to be exceptional for a recovery," stressed the FAITH chief, who is also Executive Director at top business conglomerate ITC Ltd.
With four days remaining before the ongoing lockdown ends on May 31, several industries have been pushing their demand persistently with the government hoping additional lifelines. The hospitality sector has claimed to be the worst affected by the coronavirus pandemic and has proposed a slew of support measures.
While the government has announced a Rs 3 lakh crore collateral free loan for MSMEs and other businesses, industry chamber FAITH has said that the stimulus package is an encouraging move for conventional MSME enterprises but it may not help majority of the tourism enterprise in its current form.
"There is no moratorium on interest and it is based on the assumption that cash flows will restart post lock down, which may happen for other sectors but will not be the case for most tourism companies. The collateral free loan requires an existing 'loan relationship' with banks and financial institutions and thus is not extendable to new borrowers a condition which is not favourable," FAITH counted these as reasons for its inefficacy for the travel and tourism firms.
It has alternatively proposed to set up a Tourism COVID 19 Fund of a minimum Rs 50,000 crore for enabling the tourism industry to meet its salary and working capital.
"Considering the punishing conditions for Indian tourism which have arisen from this pandemic, this fund is proposed to be an interest and a collateral free fund with principle payable over 10 years including a moratorium period of 2 years," FAITH President Anand has suggested.
As part of the TARP package, he has also proposed to extend the option of a 7-year loan equivalent to the cumulative income tax and GST of the past two years (FY19 and FY20) paid by the respective tourism, travel and hospitality enterprises. Further, this can be paid back over 7 years including a moratorium of 2 years on both principle and interest.
Noting that tourism will not demonstrate any credible cash flows post lockdown or during FY 20-21, the industry body has proposed to extend moratorium on loans from the current 6 months to 12 months.
Among other key measures, FAITH has said that domestic tourism demand will have to be incentivised through both private and corporate travel and suggested income tax deduction for holiday expenses. It has asked for complete waiver of all fixed electricity and other utility charges, excise duties, property taxes, interstate tourist transport taxes and any other local taxes during the current fiscal.