IATO News: IATO writes to PM, appeal to restore incentives for revival of tourism

The Indian Association of Tour Operators (IATO) said on Sunday it has written to prime minister Narendra Modi 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 also seeks the roll back of TCS of 20 percent to 5 percent on overseas tour packages announced in the union budget.

IATO president Rajiv Mehra wrote that these steps would place the tourism industry at 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 of the key objectives, it would be pertinent that the Government extends a helping hand to the tourism sector.

In the letter, Mehra has mentioned that the inbound tourism industry was the worst affected due to the Covid-19 pandemic.

Post revival of international flight operations and tourist visa, only 30-40 % of inbound tourism to India has been revived. So either SEIS should be restored or an alternative scheme benefiting the tourism sector should be announced in the Foreign Trade Policy 2023, as per the letter.

In the letter it has been stated that it took nine 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 levels, which was $6.17 billion in terms of foreign exchange earnings. This is indicative of the stress this sector is undergoing. “We need to compete. But it becomes very difficult as the government has withdrawn marketing and promotion support in foreign countries. SEIS has ended and no alternative benefit has been given. GST is as high as 20-23 percent without any input tax credit, whereas neighbouring countries are charging 6-8 percent,” he stated.

“To attract tourists we need to holistically look at all these issues. As regards the argument of revenue loss- it would be made up by more than 100 times as it has a positive multiplier impact on the overall economy,” he added.

Mehra also mentioned that the increase in TCS rate from 5 % to 20 % from July 1, 2023 is causing losses to the 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 government and the tour operators. This needs to be brought back to 5 percent as was before or even lower,” he stated.