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Hotel Association of India (HAI), the apex body of the hotel industry in India, met Tourism Minister G Kishan Reddy on Sunday with an agenda to reiterate its request for according hotels the status of ‘infrastructure’.
“The Ministry and the government have acknowledged the industry’s long-standing demand and have recently initiated a dialogue to address the same,” HAI said in a statement.
The Association highlighted the fact that according infra status will help the hotel industry to access funds at improved rates which in turn will reduce the long gestation period of hotels. Hotels are highly capital intensive. In addition, they require renovations and refurbishments at regular intervals to maintain standards and match global benchmarks.
Like sectors such as ports, highways, railways, hotels too are providers of key tourism infrastructure comprising tourist accommodation. Hotels have been featured as a sub-sector of social and commercial infrastructure in RBI’s harmonised master list of sub-sectors.
Don’t get many benefits
However, that does not make them eligible for benefits like tax holidays available to other infrastructure sectors. In addition, there are restrictive provisions of star category, location and capex costs. The challenge before the industry is to have infrastructure status for all categories of hotels located anywhere in India.
To aid the post-pandemic revival of the industry, the Association has recommended that hotels with a capex of ₹25 crore and above (excluding land cost) be accorded the status of infrastructure.
Currently, hotels are paying commercial interest rates. The non-availability of soft credit has been one of the significant roadblocks for investments in the hospitality sector. Infrastructure status will attract investments even from MSMEs.
The rapid growth of hotels in all categories budget, first-class and luxury are essential to meet the ministry’s growth targets for India tourism. A robust hospitality sector should serve the needs of all kinds of tourists-pilgrims, business travelers, leisure travelers, domestic or international travelers.
Key pillar of economic growth
Tourism has been identified as one of the five key pillars of the Indian economic growth and development by Prime Minister Narendra Modi. It is a recognised engine for GDP growth and for employment generation. Tourism is also among the top foreign exchange earners for the country. The hospitality sector merits national prioritisation to unleash the full potential of India tourism.
Securing infrastructure industry status would open up vast opportunities for the hospitality sector to provide employment to a wide spectrum of job seekers from the unskilled to the specialised, even in the remote parts of the country. Hotels create jobs directly and also indirectly. They also employ women and specially-abled persons, thus contributing significantly to a more inclusive economy.
The delegation was very happy with the time and attention given to discuss the issue. It was very heartening to note that the Minister extended his full support and assured his personal and individual engagement with concerned officers to strongly project the Industry’s request for infrastructure status for hotels. As stakeholders, the Industry and ministry are partners and should be supportive like a family, said the Minister.
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