The Indian Association of Tour Operators (IATO) announced that they have written to Prime Minister Narendra Modi pleading with him to reinstate SEIS (Service Export Incentive Scheme) or include an alternative programme in the new Foreign Trade Policy because the inbound tourism industry is still struggling and requires the government’s assistance.
In addition, the organisation wants the TCS on overseas tour packages that were mentioned in the Union Budget to be reduced from 20 per cent to 5 per cent. By taking these actions, the tourist sector would be on a level with international tour operators and be better able to compete with adjacent nations. Additionally, it would be appropriate for the government to offer assistance to the tourism sector during the current G-20 Presidency, which has as one of its main goals the promotion of tourism.
In the letter to the PM, Mehra mentioned that the inbound tourism industry of our country was the worst affected due to Covid-19 pandemic. Post revival of international flight operations and tourist visa, only 30-40 per cent of Inbound tourism to India has been revived, which the Govt accepts. So either SEIS should be restored or an alternative scheme benefiting the tourism sector should be announced in the Foreign Trade Policy 2023.
The letter mentions that it took 9 years to increase foreign exchange earnings to 30.05 billion in 2019 from US$ 14.49 billion in 2010. However, at present we have gone back to 2004 level, which was 6.17 billion in terms of foreign exchange earnings. This is indicative of the stress this sector is undergoing.
According to him, “We need to compete. But it becomes very difficult as the Govt. has withdrawn marketing and promotion support in foreign countries. Ended SEIS, not given any alternative benefit, GST is as high as 20-23 percent without any input tax credit, whereas neighbouring countries are charging 6-8 percent. To attract tourists, we need to holistically look at all these issues. As regards the argument of revenue loss- it would be made up more than 100 times as it has a positive multiplier impact on the overall economy”.
He also mentioned about the Increase in TCS rate from 5 per cent to 20 per cent w.e.f 1st July, 2023 is causing loss to outbound tour operators based in India. The traveler would simply bypass the Indian operator and book outside, it will be a lose-lose situation both for Govt. and tour operators. This needs to be brought back to 5 percent as was before or even lower.
