The Telegraph
Since 1st March, 1999
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Hotels go hic! hic! hurray

New Delhi, March 31: Epicures and topers, here's the good news: five-star hotels are likely to bring down the prices of that exotic French wine or your favourite Scotch whisky.

That's a likely fallout of a duty free import benefit that has been extended to the hotel industry in this year's Exim policy unveiled here today.

As a measure to boost services exports, the government has provided the duty free import facility for the service sector units with a minimum foreign exchange earnings of Rs 10 lakh.

In the case of hotels, the duty free entitlement will be 5 per cent of the average foreign exchange earned during the preceding three licensing years. It is 10 per cent in the case of other service sector units.

The entitlement can be used to import office equipment, professional equipment, spares and consumables.

The biggest consumable in the hotel industry is wine and booze, and the hotel industry reckons that the duty-free entitlement will allow it to import wines and whiskeys cheaper. The duty free entitlement is being extended to three-star hotels and above.

The Federation of Hotels and Restaurants Association of India (FHRAI) feel this provision will also apply to “wines and liquors on which import duty may vary from 149 per cent on certain high value wines to 591 per cent on low value hard liquors.”

While extending the duty-free entitlement, the Exim policy says it will not cover “imports of agriculture and dairy products”. Since these are the only negative items listed, FHRAI has been quick to seize on the fact that it will apply to wines and hard liquor.

However, there is some confusion over this and the hotel industry is waiting for a clarification from the commerce ministry.

Says Lalit Suri, chairman and managing director of Bharat Hotels: “It's a great step forward to recognise this industry. If our sales of liquor multiply, our turnover will rise sharply as well. I would expect the prices of wines to come down by 50 per cent.”

Mandeep Singh Lamba, president of Fortune Park Hotels, said, “I am happy that the government has offered us these benefits.”

Travel industry analyst Rabindra Seth says, “Sales at bars which are restricted due to the high incidence of duty will now become more affordable for the less affluent. ”

Maharaj I.S. Wahi, president of the Indian Association of Tour Operators, said, “The duty-free entitlement on imports of office equipment should reduce 10-15 per cent of the commitment of tour operators.”

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