Hospitality association, Federation of Hotel & Restaurant Associations of India (FHRAI) has submitted a representation to Charanjit Singh Channi, Chief Minister of Punjab, requesting policy reforms for the survival and growth of the hospitality industry in the State. With Assembly elections underway in the State, it has submitted the representation also to the chiefs of contesting political parties, including the President of the Bhartiya Janta Party, Ashwani Sharma; President of the Aam Aadmi Party, Bhagwant Mann and the President of the Shiromani Akali Dal, Sukhbir Singh Badal. The Association has appealed for a facilitative environment for the survival and revival of the hospitality sector in the State by implementing the requisite policy measures by the new Government.
“The State of Punjab has always been a preferred tourist destination in the country and, accordingly, has been a favoured location for the hospitality sector as well. Many renowned hospitality groups have been operating businesses across cities, while many others want to invest in the State. However, today the hospitality industry faces an existential crisis across the country, including establishments in Punjab. Against this backdrop, we request the Government for bringing in some much-needed policy reforms for our industry,”,” says Surendra Kumar Jaiswal, Vice President, FHRAI.Â
A foremost request is that the liquor license fee is reduced by 50 per cent for all categories of hotels and restaurants for the next five years to support the recovery of the industry in the State. The current license fee of INR 5 lakh per year for 5-star hotels is too high for the pandemic-hit industry.
FHRAI also requested that the VAT on the sale of liquor in hotels and restaurants be reduced to 7 per cent from the existing rate of 14.41 per cent. Power constitutes a high operational cost for all hotels and restaurants. For the industry to recover losses incurred by it during the pandemic, it would help if the power tariff for the sector were to be revised from the existing tariff of INR 6.91/KWH to INR 5/KWH.
Among other requests, FHRAI has requested that the Government open direct international flights from Mohali International Airport to countries like Canada, USA and Singapore, among others, for improved air connection for the millions of Punjabis living in these countries.
“Facilitating international flights from Mohali will not only be beneficial for the residents of the State and its people living abroad, but it will also give a strong boost to the tourism sector. The State Government needs to facilitate adequate and organized municipal services and infrastructure to the hospitality sector. Proper access or approach roads with signage and door to door garbage collection facilities are some fundamental requirements that are required. More importantly, the number of statutory and regulatory compliances including licenses, certificates, permissions and NOCs required for hospitality projects need to be rationalized and reduced,” adds MrJaiswal.
Hotel projects are highly capital-intensive, with land costs being a significant investment component, FHRAI has asked for the Government to provide land at subsidized rates. It has requested the Government for industry status to the sector for eligible hotels to benefit from the industrial rates for power supply, water supply, taxes and other payments instead of being charged at commercial rates.
“Offering land at subsidized rates will play a pivotal role in attracting new and prospective investors to the sector which has the potential of highest multiplier effects on job creation. Also, investment subsidies and tax holidays must be granted for investments in STPZ’s and other tourism projects implemented in the State. This will augment the growth of tourism and hospitality in Punjab exponentially. The Government is also requested to grant industry status to the hospitality industry by following a simple web-based registration process like the Udyam Registration of MSME. The eligibility for the industry status would be based on hotels with valid licenses statutory registration such as GSTIN. India is facing tough competition from neighbouring destinations, especially due to the higher rate of GST here and other factors which make the total tourism package expensive to India. Hospitality Industry should not be treated as a ‘Sin Industry’, and so GST rates on room tariffs should be reduced and Input Tax Credit (ITC) should be permitted for GST charged on food. We request the Government of Punjab to make required recommendations in this regard,” concluded Jaiswal.
