Tourism and Hospitality

SUMMARY

• USD 21.07 billion in Foreign Exchange Earnings (FEEs) through tourism during 2015 (4.1% Growth Rate over 2014)
• 1290.12 million Domestic Tourist Visits during 2014
• India is host to 35 world heritage sites, 10 bio-geographical zones, and 26 biotic provinces.
• India was host to 8.03 million Foreign Tourist Arrivals (FTAs) during 2015
• India has 21 Central institutes of hotel management
• In India, 78 jobs are created with every USD 1 million invested in the sector 

FDI POLICY

• 100% FDI is allowed under the automatic route in tourism and hospitality, subject to applicable regulations and laws.
• 100% FDI allowed in tourism construction projects, including the development of hotels, resorts, and recreational facilities. 

SECTOR POLICY

Ministry of Tourism channelized more than 50% of its budget for funding.

National Tourism Policy, 2002:

• Its vision is to enhance employment potential within the tourism sector as well as to foster economic integration through developing linkages with other sectors; policy objectives include positioning the tourism sector as a major engine of economic growth, positioning India as a global brand, acknowledging the critical role of the private sector and creating integrated tourism circuits.
• A draft New Tourism Policy that has currently been formulated seeks to take forward the National Tourism Policy 2002, taking into account the widespread, interrelated global developments and advancements, which have had a strong bearing on the Tourism sector

Other Important Policies:

• Guidelines for assistance to central agencies in tourism infrastructure development, the scheme for assistance for large revenue-generating projects, the scheme for PPP in infrastructure development, guidelines for approval of convention centers, motel projects, timeshare resorts, guesthouses, etc.

FINANCIAL SUPPORT

Key Provisions of budget:

• To develop and enhance tourist infrastructure a provision of USD 108.67 million is made for developing Swadesh Darshan (13 Theme based Tourist circuits) and USD 15.38 million for Pilgrimage Rejuvenation and Spirituality Augmentation Drive (PRASAD) for Beautification of Pilgrimage Centres. States have been given greater flexibility in the development of Tourist infrastructure as per local requirement from their enhanced resources
• Services provided by Indian tour operators to foreign tourists in relation to tours wholly conducted outside India are being exempted from levy of service tax
• Resources to be provided to start work along with landscape restoration, signage and interpretation centers, parking, access for the differently-abled, visitors amenities, including securities and toilets, illumination and plans for benefiting communities around them at various heritage sites which include Churches & Convents of Old Goa, Hampi, Karnataka, Elephanta Caves, Mumbai, Kumbalgarh and other hill forts of Rajasthan, Rani ki Vav, Patan, Gujarat, Leh Palace, Ladakh, J&K, Varanasi Temple town, UP, Jalianwala bagh, Amritsar, Punjab, and Qutub Shahi Tombs, Hyderabad, Telangana
• The e-Tourist Visa facility has now been increased for travelers of 150 countries 

Tax Incentives:

• An investment-linked deduction under Section 35 AD of the Income Tax Act is in place for establishing new hotels in the 2-star category and above across India, thus permitting a 100% deduction in respect of the whole or any expenditure of a capital nature excluding land, goodwill and financial instruments incurred during the year

State Incentives:

• Incentives offered by state governments include subsidized land cost, relaxation in stamp duty, exemption on sale/lease of land, power tariff incentives, concessional rate of interest on loans, investment subsidies/tax incentives, backward areas subsidies, and special incentive packages for mega projects
• Incentives are provided for setting up projects in special areas – the North-east, Jammu & Kashmir, Himachal Pradesh, and Uttarakhand 

Incentives from the Ministry of Tourism:

• Assistance in large revenue-generating projects
• Support for Public-Private Partnerships (PPPs) in infrastructure development such as viability gap funding
• Schemes for capacity-building of service providers

INVESTMENT OPPORTUNITIES

Tourism:

• The presence of world-class hospitals and skilled medical professionals make India a preferred destination for medical tourism
• As an opportunity for cruise owners and operators by capturing/capitalizing the opportunity from a vast beautiful coastline, vast forest, and undisturbed idyllic islands.
• Rural tourism schemes have been implemented by the Ministry of Tourism in 2002-03 with the objective of highlighting rural life, art, culture, and heritage in villages that have core competence in art, craft, handloom, textiles, and the natural environment. Under the Swadesh Darshan Scheme, the Ministry of Tourism identified Rural & Coastal Circuits as one of the thematic circuits for development.
• Eco-tourism is at a nascent stage, but there are conscious efforts to save the fragile Himalayan eco-system and the culture and heritage of indigenous people.
• The tourism sector in India offers opportunities across various sub-segments such as timeshare resorts, convention centers, motels, heritage hotels, and the like.
• Investment opportunities in the setting up of tour operations and travel agencies cater to burgeoning tourist inflow.