Tourism industry is among the worst impacted industries due to the COVID-19 pandemic and all sectors including airlines and hospitality have been severely impacted. A helping hand, largely from government, is definitely required for the survival of tourism industry in India. Now what is debated in tourism industry is whether it should be in form of a direct financial grant or not! Government itself has not offered any views on that.
Following the news that the Indian Association of Tour Operators (IATO) has urged the government to provide relief to the tourism sector that is in dire straits due to COVID-19; Animesh Kumar, Director of Travel and Tourism Consulting at GlobalData, a leading data and analytics company, said, that, “India, with over 4.2 million confirmed cases, is only behind the US in terms of the number of confirmed COVID-19 cases. High number of cases coupled with limited international flights is keeping away the inbound travelers. Till few days ago, even domestic tourism was not an option for most Indians as various states had restricted inter-state movement of people. While under Unlock 4, all restrictions on inter-state or inter-district movement of people have been removed, the tourist volumes are likely to take a long time to reach pre-COVID levels.
“IATO comprises of 1,600 member businesses covering all segments of tourism industry and many of these businesses are smaller ones. The crisis poses existential risks to smaller players as they lack deep pockets to see them through the difficult times.
“However, giving any type of direct financial aid may not be prudent. The Indian economy is not in a healthy state and it will put an additional burden. More importantly, the current cash flow crunch in the tourism industry is an issue created due to the crisis but it is not the root cause. The situation has arisen due to the pandemic and because people have almost stopped travelling. Instead of giving financial grant, it is more important for the government and the industry stakeholders to take steps to bring in inbound tourists.
“Travel-dependent economies across the globe are coming up with innovative solutions, including activities for instilling confidence – like the SG Clean, Qatar Clean initiatives – as well as activities to attract tourists – like safe travel bubbles, pilot projects and offering incentives. Understanding and leveraging best practices from other countries/destination is crucial for all stakeholders in India to come up with the right strategies for the survival and revival of the tourism industry. The government, on its part, must extend support to ease the immediate cash flow challenges through measures like interest free loans, provident fund relief and GST exemption.”
IATO had on Monday urged the government to provide immediate relief to the tourism sector, which has been severely hit by the COVID-19 pandemic. It said in a statement that, most of the tour operators have been forced to lay off their staff, many have sent staff on furlough and those who are remaining are getting less than 30% salary.
In light of this, IATO sought various relief measures from the government. This includes one-time financial grant of the gross salaries amount paid to the staff of tour operators on the basis of the balance sheet of fiscal year 2018-19 which is submitted with the government authorities, IATO said.
The industry body also requested, “the government to raise duty drawback under the SEIS (Service Export India Scheme) from 7% to 10%. Such a measure would go a long way in alleviating the liquidity problem as the sector currently has zero billing and this would help tour operators to survive”, it added.
It has also sought amendment in rules regarding granting of loans to micro, small, and medium enterprises (MSMEs) as presently only those who have established relationships with banks are being offered loans, IATO said.
“The tourism industry is in dire straits and needs urgent relief from the government…The measures we have sought do not involve huge outgo from the government but if these relief can be given now, these can go a long way in providing succor to the stressed sector failing which many tour operators would shut down,” IATO President Pronab Sarkar said on Monday.
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