The Telegraph
Since 1st March, 1999
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Govt bets on FDI for hotel boom
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New Delhi, Feb. 12: The government is betting on FDI for the $1.5 billion needed by the hospitality industry to add another three lakh hotel rooms over the next three years.

“To grow to this level, we need a lot of foreign investments in the sector,” Ajay Dua, secretary, department of industrial policy and promotion, said today.

However, data with the government reveals that in the last 15 years, the industry has attracted FDI worth only $450 million, he added.

Dua was addressing a seminar on the growth prospects of the hospitality industry organised by the Federation of Indian Chambers of Commerce and Industry (Ficci).

Citing the infrastructure sector as the major bottleneck, he said, “Lack of physical infrastructure — roads, ports and electricity — is a major hurdle. Once these are taken care of, large investments will flow in.”

According to him, the government will re-visit the foreign equity cap in the infrastructure sector in March and further liberalise the regulations for FDI inflow.

Meanwhile, the industry has expressed the need to build budget hotels. Ficci president Habil Khorakiwala said the tourism ministry should take steps for a 10-year tax rebate for new budget hotels and encourage the Railways to give up some of its vast land holdings for trackside hotels.

He said uncertain levels of taxation by various states have made foreign investors wary of investing in India. “While some states have made their policies attractive by offering a range of incentives to attract investors, many states lag behind,” he added.

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