IATO appeals to the PM for incentivizing schemes

IATO President Rajiv Mehra wrote to the PM requesting him to restore SEIS (Service Export Incentive Scheme) or introduce an alternative scheme in the new Foreign Trade Policy, as the inbound tourism sector is still suffering and needs hand-holding by the government. Besides, it seeks to roll back TCS of 20 per cent to 5 per cent on Overseas Tour Packages announced in the Union Budget. These steps would place the tourism industry on par with foreign tour operators and help them compete with the neighbouring countries. Also during the current G-20 Presidency, where promoting tourism is one key objective, it would be pertinent that the Government extends a helping hand to the Tourism sector.

 In the letter, Mehra mentioned that the inbound tourism industry of our country was the worst affected due to the Covid-19 pandemic. Post revival of international flight operations and tourist visas, only 30-40 % 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.

In the letter, it has been stated 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 the 2004 level, which was 6.17 billion in foreign exchange earnings. This is indicative of the stress this sector is undergoing.

According to Mr Mehra, “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 has withdrawn marketing and promotion support in foreign countries.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 per cent without any input tax credit, whereas neighbouring countries charge 6-8 per cent. 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 ”.   

Mehra also mentioned about the  Increase in TCS rate from 5 % to 20 % w.e.f July 1, 2023, is causing losses to outbound tour operators based in India. The traveller 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 returned to 5 per cent as before or even lower.