Tourism Minister To Support Infrastructure Status For Hospitality

Anindita Chattopadhyay - New Delhi

T Indian hotel industry so far has been fighting its own battle with the union and state governments respectively for infrastructure status and tax rationalisation. But now, it has the union minister of tourism supporting the cause.

India needs at least 100,000 more rooms by 2010 to sustain the positive growth of tourism. The country, which witnessed a 26 per cent growth till September 2004, has already started feeling the room crunch. For instance, hotels in Rajasthan are running full occupancy and the additional demand is being met by accommodating the guests in guesthouses and hostels. Hotels, for the last so many years, have been demanding infrastructure status under 80I(A), which would give income tax concessions for the next 10 years to a new hotel or convention centre.

According to Vivek Nair, former president of the Federation of Hotel & Restaurant Associations of India (FHRAI), "Full infrastructure status is necessary because hotels are cost intensive and have long gestation period. The partial infrastructure status under 10(23)G, which only enables us to get loans from financial institutions, is not really encouraging new investment."

Renuka Chowdhury, minister of state for tourism, talking exclusively to Express Hotelier & Caterer on the sidelines of FHRAI award function said, "I realise that infrastructure status for the hospitality industry is necessary to have more hotel rooms. With our eye on the next budget, I have asked the tourism industry to give a collective suggestion on what is required for us in the budget. The hospitality industry should give their suggestion on infrastructure status and tax exemptions along with their commitment on what they would give when they get it. Then my ministry would do an internal review and I would push the finance ministry for granting the demands of the industry."

Pointing out that land availability is another bottleneck, the minister added, "Further, I have already written a letter to the urban development ministry and spoken to the minister personally to look into archaic land laws and land allotments to hoteliers so that we are geared up to take on the tourist pressure."

When asked about the high luxury tax and bar licence fees in some states, she said, "I am taking up the matter with the states. For instance, I have personally spoken to Sheila Dixit and pointed out the negatives of a high luxury tax. But every state also needs to raise revenue and often take the secure route to do so."

Reacting to the minister's comment, Shyam Suri, secretary general, FHRAI, said, "Like every year, we would send our proposal to the minister before the budget. And we are hopeful she will take up our cause."