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The Federation of Hotel and Restaurant Association of India (FHRAI) met the Tourism Minister Prahlad Singh Patel and Minister of MSME Nitin Gadkari to discuss the deteriorating state of the hospitality and tourism industry and MSME to recommend immediate fiscal measures to save it from imminent collapse.
“The Tourism Ministry acknowledged the industry’s concerns and assured that necessary help will be extended to support the hospitality industry. It has also reassured that sector’s issues and recommendations offered by the FHRAI delegates will be raised with the Prime Minister and the Finance Ministry. The Tourism Ministry is closely following up with the Ministry of Finance on the SEIS scheme and other concerns will be addressed on a one-on-one basis with the respective Ministries,” said Gurbaxish Singh Kohli, Vice-President, FHRAI.
The MSME Minister too has expressed that they are aware of the hardships the industry is going through and that will look into the industry’s concerns favourably with regards to the ECLGS scheme and the RBI’s Resolution Framework. It also expressed that they will consider the industry’s demands favourably and at the earliest, added Kohli.
The industry’s total revenue in FY2019-20 stood at ₹1.82-lakh crore and as per our estimates, in FY 2020-21, approximately 75 per cent of the industry’s revenues got wiped off. That is more than ₹1.30-lakh crore revenue hit for the Indian economy. The total loan outstanding to the hospitality industry is over ₹ 60,000 Cr today.
“The hospitality industry is under tremendous cash flow pressure to meet its operating expenses including payment of salaries and wages, repayment obligation to banks and financial institutions, and funding its capital expenditure plans. We request timely payment of cash flows under the SEIS scheme and refund of income tax payment that is due to the hospitality sector. This will make a big difference to the ability of hotels to pay the workforce employed in the sector, meet the operational expenses and mange loan repayment obligations,” says Pradeep Shetty, Joint Secretary, FHRAI.
Looking for waiver
The association also suggested waiver or relaxation under the EPCG scheme. With regards to the average Foreign Exchanges Earnings (FEE), it has stated that the industry does not have any FEE to redeem the licence as there has been no foreign travel in this pandemic. Even prior to the pandemic, the arrivals and spending of foreigners were dismal and the EPCG conditions were impossible to adhere to and hence the condition should be completely waived off and the conditions be deemed as adhered to and fulfilled. It has also suggested that foreign tourists visiting India, and staying and spending in hotels should be deemed as foreign exchange earned by hotels for the purpose of redemption of EPCG licence.
“Due to financial losses, 40 per cent of hotels and restaurants in the country have shut down permanently and about 20 per cent haven’t opened fully since the first lockdown. The remaining 40 per cent continue to run in losses. The financial institutions have marked the industry in negative list,” said the official statement.
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