India’s hospitality sector must address several key issues, such as the lack of infrastructure status, tax rate rationalisation, simplified visa processes, and increased state government incentives, to unlock its full potential, according to K B Kachru, President of the Hotel Association of India, ahead of the Union Budget.
Kachru stressed the need for India to improve its marketing strategy, pointing out that countries like Japan, South Korea, and Thailand have boosted their GDP by prioritising tourism. He also called for the identification and promotion of high-potential MICE (Meetings, Incentives, Conferences, and Exhibitions) destinations and the development of the necessary infrastructure to attract global tourists.
"We need investment. Investment can’t be done by the government alone. The private sector has to come in and invest. What would motivate them to invest in the country is that they must have a respectable return on investment (ROI); only then will they invest," the Hotel Association of India President said.
At the state level, Kachru urged governments to offer more incentives and be proactive in attracting investments. He also advocated for streamlining the hotel approval process, noting that while the number of required licences has reduced, the approval procedures still need to be simplified. A single-window clearance system, he added, should be implemented as soon as possible.
"... There was a time when we used to have close to 100 licenses to start a hotel. It has been substantially reduced. But still, I think we need to, we need to make it easier for people to operate hotels... Principally, everybody accepts that there should be a single window, but till that stage comes, I feel we should reduce approval processes to the minimum," Kachru said.
Kachru said countries like Japan, South Korea, and Thailand have been able to grow their GDP by giving importance to the tourism sector.
Stating that the contribution of tourism to Thailand's GDP is about 25 per cent, he said, "We (India) are still struggling around 6 per cent or so... If we give it infrastructure status, the loans will be at a decent rate, as given to all other industries. We're not asking for more." Incentives to develop infrastructure in terms of hotels, entertainment centres, and convention halls should be provided at the 50 new destinations that the government announced to develop, he added.
He also stressed the importance of simplifying visa procedures to boost tourism. Kachru compared India’s tourism contribution to GDP, which is around 6%, to Thailand’s, which stands at 25%. He argued that granting infrastructure status to the sector would enable hotels and related projects to access loans at competitive rates, akin to other industries.
Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2023-2024, stated that at least 50 destinations will be selected and developed as a complete tourism package.
Regarding the government’s plans to develop 50 new tourism destinations, Kachru stated that projects at these sites, worth around ₹10 crore, should be included under the industry classification to receive proper support.
State governments have to give it the industry benefit. Look at electricity tariffs, whatever you are giving to other industries as electricity tariffs give to the hotels also, he said.
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