New Delhi, Feb. 24: The tourism sector hopes that it will be awarded the “industry” status in Budget 2013-14 as it is a vital foreign exchange earner.
The sector also expects that the entire hospitality industry will earn the infrastructure status, and finance minister P. Chidambaram will reduce service and luxury taxes.
“The tourism sector should be treated on a par with exporters based on its foreign exchange earnings. No benefits are being given to our sector, while exporters get a number of benefits. The fact is that retention of foreign exchange is much higher in our sector than any other export-oriented industry,” said Subhash Goyal, president of the Indian Association of Tour Operators (IATO).
He said tourism should be given physical exports industry status. Several tour operators are doing business from offices in Nepal and Bhutan because of such distinction between industries, Goyal said.
According to the IATO, 90-95 per cent of the forex earned by tour operators remain in India, while 60-90 per cent of the forex earned by exporters of gems, jewellery and carpets are spent on imports of gold, precious stones, wool and other raw materials.
A survey by the World Travel and Tourism Council showed that the sector generated more jobs than chemical manufacturing, automotive manufacturing, communications and mining sectors combined together.
Travel and tourism’s total contribution, including direct, indirect and induced impacts to GDP in India, was around 6.4 per cent of total GDP in 2011-12 compared with 3.3 per cent for automotive manufacturing.
Tour operators have also demanded an exemption from paying service tax.
“Just like exporters, based on foreign exchange earnings, tour operators should also get exemption of service tax on package tours as the payment is received in foreign exchange. With service tax added at present, Indian packages are very cost prohibitive and we cannot match the prices on holiday packages which are given by our competitive countries such as China, Thailand, Malaysia, Sri Lanka, Singapore and Hong Kong,” said Sarab Jit Singh, vice-president of the IATO.
The industry status will help the sector to get more tax and duty exemptions and easy finance from banks.