Logistics

Coronavirus blow: Tourism sector to face severe headwinds

Our Bureau Mumbai | Updated on March 19, 2020 Published on March 19, 2020

Homeward bound: The collapse of demand in the travel and tourism industry is one of the side effects of the flu contagion   -  REUTERS/THOMAS PETER

Amid severe headwinds because of the coronavirus pandemic, and the implementation of tax collected at source (TCS) on tour packages, over 3.8 crore employees can become unemployed in the travel and tourism industry, said federation of Associations in Indian Tourism & Hospitality (FAITH) on Thursday.

The Indian government, just like many other governments have closed their borders, have suspended visas till April 15. Several international airlines have trimmed their operations to Indian destinations and Indian airlines have suspended complete operations to international destinations and reduced their domestic operations. To add on to this, the governments have requested people to work from home.

It has often been stated that the larger tourism industry in India contributes to about 10 per cent of the GDP (approximately US$275 billion).

According to a Hotelivate report, the fact that anywhere between 15 and 25 per cent of the employees across the various branded hotel chains in India are either contracted or casual staff. It may not be evident to many that about 8 to 10 per cent of the total staff strength of the global cruise liners are Indians. These people become the weak link to the whole chain.

“It is estimated that as a result of this pandemic, Indian Tourism industry is looking at pan India bankruptcies, closure of businesses and mass unemployment. It is believed that around 70 per cent or 3.80 crore out of a total estimated workforce of 5.5 crore (direct and indirect) could get unemployed . This effect of job losses and layoffs has already begun throughout the country,” FAITH said.

Last year, Cox & Kings faced severe headwinds, several small and big players in the tourism industry have already said that they may have to lay off several people because of major headwinds in the tourism industry.

A large chunk of total tourism business activity of India, which is estimated at over $28 billion in forex and upwards of ₹2 lakh crore in domestic tourism activity will be at economic risk through the year. Thus, in excess of ₹5 lakh crore of direct tourism industry and almost double that of total economic activity is at risk.

FAITH, the umbrella body of the industry has written a letter to Prime Minister Narendra Modi to highlight the economic impact of the coronavirus pandemic on the tourism industry and seek his intervention in terms of financial relief for the industry to grapple with the situation.

Along with this, the Indian travel industry players had started a Twitter campaign called ‘save the travel industry’, urging the government to roll back the Tax Collected at Source (TCS) on outbound travel packages.

The Union Budget this year introduced a change in Section 206C of the IT Act with regards to Tax Collected at Source (TCS), to levy five per cent tax on overseas remittance and sale of outbound packages.

One of the demands by FAITH is to waive off the current proposed TCS.

Other things include deferment for twelve months of all statutory dues whether GST, Advance Tax payments, PF, ESIC, customs duties at the Central Government level or at any state government level the excise fees, levies, taxes, power & water charges, bank guarantees & security deposits and deferment of all renewals, across the tourism, travel, hospitality & aviation industry and asked for setting up a fund for twelve months on the lines of MNREGA to support basic salaries with ‘direct transfer’ to affected tourism employees.

Published on March 19, 2020

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.