FHRAI Proposes Reforms Ahead of Budget, Advocating for the Transformation of India’s Hospitality Sector
Grant of Infrastructure Status to Hotels with a Project Cost of Rs. 10 Crore and Above: More stimulus packages and incentives for tourism and hospitality Ease of Doing Business measures in hospitality Declare Tourism as a Priority Sector
- Grant of Infrastructure Status to Hotels with a Project Cost of Rs. 10 Crore and Above:
- More stimulus packages and incentives for tourism and hospitality
- Ease of Doing Business measures in hospitality
- Declare Tourism as a Priority Sector in the Country
- Comprehensive Review and Reduction of GST Rates
New Delhi, 31st Jan 2024 – As anticipation builds for the upcoming budget, the Federation of Hotel & Restaurant Associations of India (FHRAI) presents a set of pre-budget expectations aimed at redefining the hospitality sector in India. FHRAI proposes a transformative move to confer Infrastructure Status universally to hotels with a project cost of Rs. 10 crores and above, irrespective of the city population. This strategic step aims to eliminate geographical biases, growth and accessibility in the hotel industry. The inclusive approach aligns with the spirit of equitable development, promising a remarkable nationwide surge in the hospitality sector.
The apex association representing the hospitality sector believes that granting infrastructure status will be a game changer by facilitating long-term loans at affordable interest rates to accelerate growth in the sector. The sector also expects more stimulus packages and incentives from the government to equip the sector to achieve the ambitious target of welcoming 100 million international tourists by 2047, which includes a favourable GST regime and ease of Doing Business measures in hospitality.
The absence of a uniform system in the hospitality sector for approvals and compliance is a serious issue that is hampering the growth of the tourism & hospitality sector in the country today. From the inception of a hospitality project to day to day running of the establishments, the sector is tangled in the complex web of bureaucratic processes. This needs to be simplified through measures such as a single window clearance system deemed approvals, self-regulation, merging of multiple approvals & licences and fixing a validity period of a minimum of 5 years for the license.
“The hospitality industry is a vital contributor to India’s economic growth. We believe that the proposed pre-budget reforms are pivotal in catering to the untapped potential of our diverse nation, propelling the hospitality sector towards unprecedented growth. FHRAI urges the government to consider these reforms seriously, recognizing the crucial role of tourism and hospitality in shaping India’s economic landscape.”Pradeep Shetty, President of the Federation of Hotel & Restaurant Associations of India shared his perspective on the proposed reforms,
The Federation strongly exhorted the need to classify tourism, travel and hospitality in the concurrent list to ensure a national shared common framework between the Centre and States for tourism and all its verticals.
The Federation stated that Tourism is one of the important sectors in the country accounting for around 10% of GDP. The tourism and hospitality industry in India carries an extensive potential to be the key driver to accelerate the socio-economic development of the country. To achieve this, tourism should be declared a priority sector in the country with special incentives and benefits to help the sector to attain its true potential.
FHRAI calls for a comprehensive review and reduction of GST rates in the hospitality sector, positioning India competitively on the global stage. Specifically, the proposal recommends the abolition of the 18% GST category for hotels above ₹7500 and its merger with the more moderate 12% GST category. This recalibration is expected to make India a more affordable and attractive destination, stimulating tourism and bolstering the revenue generated by the hospitality sector.
These proposed reforms are not just fiscal considerations; they are crucial steps towards positioning India as a global hospitality hub. We look forward to a budget that recognises the pivotal role of tourism and hospitality in the economic landscape and implements measures that propel India to the forefront of global travel destinations.
The Federation of Hotel & Restaurant Associations of India (FHRAI) is the apex body of the Indian Hospitality industry. Founded in 1955, the FHRAI is the third-largest Hospitality association in the world and has diligently built on its rich legacy. The Association is today privileged to serve as the leading voice of the hotel and restaurant industry and plays a seminal role in supporting the growth trajectory of India’s hospitality and tourism sector. FHRAI provides a vibrant interface between the industry, government, regulatory bodies, academia, international organizations, civil society and the media.