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Bengal government greenlights proposal to grant industry status to hospitality sector

The cabinet approved the proposal as it would help to draw investment in the sector that has a tremendous potential to generate jobs, a minster said

Pranesh Sarkar Calcutta Published 09.11.23, 07:53 AM
Mall Road at Darjeeling.

Mall Road at Darjeeling. File picture

The Bengal cabinet on Wednesday approved a proposal to grant industry status to the hospitality sector in a bid to draw investments in tourism and to generate employment ahead of the 2024 Lok Sabha polls.

“The tourism department had put forward a proposal to give the status of industry to the hospitality sector, which includes hotels and other tourism-related facilities. The cabinet today approved the proposal as it would help to draw investment in the sector that has a tremendous potential to generate jobs,” said a minister present in the cabinet meeting at Nabanna.


Sources said the initiative would ensure several facilities for the hospitality sector.

First, the hotels would be able to save a handsome amount on electricity bills as they would have to pay power tariff as per the industrial rate, and not the much higher commercial rate.

“Hotels can save up to Rs 3 per unit on electricity bills. This is huge as the hotels spend a considerable amount on power bills. The second highest expenditure of a hotel after the outgo on employees’ salary is electricity bills,” a source said.

Second, the hotels would have to pay electricity duty at a much reduced rate once the hospitality sector gets industry status. “The exact amount that would be saved from the electricity duty cannot be calculated immediately. But the amount will be significant,” said another source.

Third, the hotels will be able to save on water supply bills. Now, the hotels pay commercial rates for water supply. When the hospitality sector would get the status of industry, it would pay the industrial rate, which is lesser compared to the commercial rate.

Fourth, the hospitality sector would have to pay lesser licence fees and other taxes, including property tax.

Sources said that once the hospitality sector gets the status of industry, it would be entitled to a better FAR (floor-area ratio).

“FAR refers to the relationship between the areas on which the building is constructed and the building floor area that is usable or is allowed to be used. A better FAR means more construction or floor area will be allowed on a particular land. Industrial constructions get the benefit of more construction on a particular land. This will definitely attract investors to set up hotels and other tourism-related infrastructure,” said a source.

Sudesh Poddar, the president of the Hotel and Restaurant Association of India and the president of the organisation’s eastern chapter, said there was a longstanding
demand for the status of industry for the hospitality sector.

“As the cabinet has approved the proposal, it would encourage investors to invest in the tourism sector in the state. Also, it would aid the expansion of the existing infrastructure,” said Poddar.

Sources in Nabanna said the government was exploring all possible ways to generate more jobs ahead of the 2024 Lok Sabha polls since lack of jobs remains an Achilles Heel of the ruling party.

“Fresh investment in the hospitality sector can create huge employment opportunities as the state has a tremendous potential in tourism. The state government feels that if the benefit is extended to the hospitality sector, it can draw huge investments,” said a bureaucrat.

The tourism industry contributes around 13 per cent of Bengal’s GDP, which is higher than the national average of 7.5 per cent.

According to data available with the Union tourism ministry, around 1.04 million tourists from abroad visited Bengal in 2022 while the number of domestic tourists to the state last year was 84.54 million.

“The decision would surely give a boost to the tourism sector, which employs over 15 lakh people in the state. It would also encourage major hotel chains to come up with more accommodations,” said Samrat Sanyal, general secretary, Himalayan Hospitality & Tourism Development Network, an apex body of tourism stakeholders.

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