Travel industry braces for a ₹8,500-crore hit

The travel industry is likely to take a hit of ₹8,500 crore as the government suspended all existing visas on Wednesday due to the outbreak of coronavirus.

The Indian Association of Tour Operators (IATO), the apex body of the travel industry, on Thursday said that while it was a good decision to curtail the situation, it would mean job losses and a slowdown in the travel industry.

On Wednesday, the Indian government suspended “all existing visas, except diplomatic, official, UN/international organizations, employment, project visas” until April 15.

The visa-free travel facility for Overseas Citizen of India (OCI) holders has been suspended until the same date. The curbs go into effect on March 13 at the port of departure. India imposed these stringent travel curbs to the country after the World Health Organization (WHO) declared the coronavirus outbreak a pandemic.

Cascading effect

According to Rajesh Mudgill, Secretary, IATO: “The ban on travel to India for a period of one month will have a cascading economic impact and will lead to job losses in the entire hotel, aviation and travel sector. We estimate that it will lead to direct loss of not less than ₹8,500 crore.” In view of the staggering loss that the entire industry stares at, the apex body requested the government to consider a review of the situation after 10 days.

IATO requested the government to consider giving relief in taxation to the sector as it would help in mitigating the losses suffered.

“The government can consider waiving of GST dues for the period or going forward reducing the rates for next financial year,” said IATO in a statement.

Meanwhile, the Indian travel industry players have 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.

Flights cancelled

Nearly 585 international flights have been cancelled to-and-from India between February 1 and March 6 because of the outbreak of coronavirus.

As many as 16 sixteen international airlines have cancelled 492 flights and four private Indian airlines have cancelled 93 flights during this period, according to data available with the Ministry of Civil Aviation.