Coronavirus blow: Tourism sector to face severe headwinds

Our Bureau Mumbai | Updated 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

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