IATO writes to govt demanding better support for travel & hospitality sector
The Indian Association of Tour Operators (IATO) has written to Commerce and Industry minister Piyush Goyal and Tourism minister Prahlad Singh Patel urging the government to take various steps to protect the travel industry.
In his letter IATO President Pronab Sarkar said, “We hope that the tourism industry which is the most affected sector due to Covid -19, will get considerable relief from the government both for survival and revival.”
As result of the pandemic, the travel & hospitality industry in India is in dire straits today. There are nil revenues and almost all tourism businesses are running out of working capital and are staring at mass unemployment and bankruptcies.
“Offices of all our members all over the country are closed. The entire tourism industry has come to stand still with no business. There is zero billing and no cash flow. There is uncertainty amongst the tour operators as to how and when they are going to revive their business. It is expected that the vaccination shall take about one year to come in rescue of human life that is April 2021 and by that time again our off season will start from April 2021 to September 2021 to make the period of revival to 18 months,” Sarkar said in his letter.
This is expected to have an economic impact of almost Rs 5 lakh crores and employment of an estimated 3.8 crore jobs which are created directly and indirectly by tourism in India.
Out of over 1700 members of our association, 90% of our membership consists of small tour operators and under the present financial crisis, they do not have funds to pay salaries to their staff and they are looking forward to support from the government with bailout package.
To salvage the industry, our request to Ministry of Commerce/Ministry of Finance and Ministry of Tourism is placed below in order of priority.
ISSUES RELATED TO MINISTRY OF COMMERCE
A) IMMEDIATE RELIEF REQUIRED WITHIN 30-60 DAYS
Enhance value of SEIS to 10%:- To enhance the value of SEIS to 10% for 2019-20 across all tourism, travel & hospitality companies. This will help overcome the present working capital crisis. Considering the dried up situation of cash flows it is requested to enable SEIS at Gross FEE and not Net FEE.
Extension of SEPC Membership:- Extension of SEPC membership and to be automatically revalidated till 31st March 2021 without any membership fee.
B) LONG TERM RELIEF REQUIRED
SEIS for 2020-25: – During off season most of the tourism infrastructure is underutilized. It will give huge benefit if additional incentives are offered by the Government during April to September for which we recommend that SEIS percentage may be increased to 15% during off season i.e. April to September and 10% during season i.e. during October to March. In both the cases, this will help offer competitive packages comparing to our neighbouring countries and lure them to visit India in big numbers.
Deemed Exporters Status to Tourism Industry: – Tourism Industry be given status of deemed exporters based on their foreign exchange earnings and all benefits that are given to exporters of goods and IT industry should be given to tourism industry including exemption of GST on foreign exchange billing.
Tax Refund for Tourists (TRT) Scheme: – There is a provision made in GST Law for Tax Refund for the Tourists’ (TRT) scheme provided for, under section 15 of the IGST Act 2017, which has not been implemented yet. This will help foreign tourists to spend more on shopping which will increase foreign exchange earnings for the country.
Waive off import duties:- Waive off all import duties required to upgrade tourism infrastructure.
Import of Tourist Vehicles under EPCG Scheme:- Enable permission to import of tourist vehicles under EPCG by tourism services exporters.
Additional incentive for duty free imports:- Enable an additional incentive for duty free imports of up to 5% of net FEE during current year
ISSUES RELATED TO MINISTRY OF FINANCE/MINISTRY OF TOURISM/STATE GOVERNMENTS
Bailout Package of 23-25% of the total turnover to pay salaries:- Bailout financial package to defray the salaries of the employees which can be decided based on the turnover of the company in last financial year and the employees strength. Along with this we may add the other operational cost of the office. The average operation cost works out to 23-25% of the total turnover of the company. This can be worked out by the government as per the turnover of the company /annual return filed by the company for the financial year 2018-19. Alternatively, it could be a financial grant to support basic salaries with ‘direct transfer’ to affected tourism employees.
Deferment of Statutory Dues: – A complete deferment for twelve months of all statutory dues payable by tourism, travel & hospitality industry at the Central Government level, state and municipal government level without attracting any penal interest. These could include GST, Advance Tax payments, PF, ESIC, customs duties, excise fees, fixed power & water charges.
Creation of Tourism Covid 19 Relief Fund:- A support fund ‘Tourism COVID 19 Relief fund’ to be set up by RBI or Ministry of Finance or Tourism to support salaries and establishment costs. It should be either in the form of non-collateral interest free loan to Tourism corporates for repayment of the principle within 5- 10 years.
Creation of National Tourism Task Force:- A national tourism task force of all relevant ministries of the Central Government along with ministry of tourism and chief secretaries of State governments and industry stakeholders to be created. This should be with legislative powers on the lines of GST council for state wise standardised tourism response.
Moratorium of Bank Loan EMIs:- RBI has already provided for three months moratorium on EMIs of principle and interest payments on loans and recalculation of working capital from Financial Institutions. This needs to be without any accrued and accumulated interest during this period and it needs to be extended for twelve months.
GST Tax Holidays:- A complete GST Tax Holiday for the Tourism, Travel & Hospitality Industry for a period of twelve months.
LTA Incentives for Indian Citizens: To boost Domestic Tourism, incentivise Indian citizens through LTA like income tax benefits for holidaying within India. These could be a deductible expense (for e.g. of upto ₹ 1.5 lakhs) against GST invoices. Facility of booking such tours under LTA scheme for all the employees of Centre & State governments, Public Undertakings and Centre/State Government Autonomous Bodies should be available with all the tour operators recognised by the Ministry of Tourism, Government of India and not just restricted to Government tour operators only.
Full Refund from Airlines towards cancellations:- Enable Full refunds of cancellations and advances of travel agents & tour operators from airlines. Ensure that the refund money is secured from possible default of airlines especially foreign airlines as well as low cost airlines. Advances/float accounts also to be refunded in full immediately as they are money for not issued tickets. MOCA can ensure this through an executive ruling or a fund may be setup underwrite these payments to travel agents & tour operators which will be securitised against these receivables from IATA and low-cost carriers & non-IATA airlines. Refund should be considered from the date of cancelling the Foreign Tourists Visa from various countries wise as and when it was announced by the government.
Refund from Railways and State Governments:-A huge amount has been blocked as advance booking payments made to Railways for Luxury Trains and various state Government Authorities for visit to wildlife parks. Since after the directive from the Central Government all foreign tourists had to cancel their tours and waiting to get the refunds. Railways & state government owned institutions such as luxury trains wildlife parks to refund all tour operator & travel agents. Advisory to be issued to all stakeholders in tourism value chain to issue open credit to tour operators & travel agents in case they are unable to refund in cash. Refund should be considered from the date of cancelling the Foreign Tourists Visa from various countries wise as and when it was announced by the government
Complete withdrawal of Tax Collection at Source (TCS):- Complete withdrawal of TCS on all travel agents and tour operators to prevent un-competitiveness of Indian travel companies. At present this is deferred till 30th September 2020 only.
Revision in MDA Guidelines:- MDA scheme guidelines to be revised with a progressive outlook, considering the changed market situation and the need to restart tourism promotions and clause of 5% increase in turnover in 3 cumulative years to be removed. We request all pending MDA cases due to this reason to be settled at the earliest.
Abolish Tourist Visa Fee:- Abolish tourist visa fees for the next few years as a marketing incentive to boost demand.
Tourism Marketing Plan:- Design and undertake a detailed source market wise tourism marketing plan.
Amendment in GST Laws for IGST:- GST law to be re-examined & amended to enable IGST for hotels which will allow seamless credit across all travel agents and tour operators and as per the option of reseller model for travel agents as they are distribution arms for airlines.
Support Scheme of PF to be relooked:- The support scheme announced for PF of 90% employees < ₹ 15000 in organisations below 100 employees doesn’t cover a vast majority of the tourism sector. Cover all tourism MSME employees above minimum wages across all states. The scheme can also be covered under PM Rojgar Pradhan Yojana where PF contribution is already fully made by the government to promote enterprises.
Insurance Corpus of ESI to be used to provide wages to all tourism sector employees:- The insurance corpus of ESI needs to be used to provide paid wages relief to all -tourism employees for all accumulated days from non-availability of work and the act needs to be amended immediately as the PF act was done. The inability to work due to infection or risk of infection to self from a Pandemic and others is a valid reason. This is a forced “away from work situation’ under a force majeure and is WHO advised / GOI enforced for preventive care rather than face the medical expenses for curative care or fatality. The fatality rate was almost 5% globally and almost 10% in some countries and thus this leave from work needs to be covered under ESI.
Looking after unorganised employees in tourism sector:- For all unorganised employees working with the tourism sector and who will not be covered by PF / ESI ensure coverage of sustenance wages and medical condition.