India’s hospitality industry anticipates infrastructure status to lower financing costs, rationalisation of goods and services tax (GST) rates to stay competitive with global peers, a digital single-window clearance system for hotel licences and approvals, and measures for increasing the skilled workforce.
Industry stakeholders believe that the full potential of India’s travel and tourism sector remains untapped. This issue becomes a key focus as India faces a significant shortage of hotel rooms compared to its global peers.
“The hospitality industry expects the government to grant infrastructure status to hotel and convention centre projects costing Rs 10 crore or more,” said spokesperson of Hotel and Restaurant Association of Western India (HRAWI) and vice-president, Federation of Hotel and Restaurant Associations of India (FHRAI).
He further added that granting industry status and allied benefits to the hospitality sector across the country will amplify its growth. Such initiatives would help India achieve its vision of becoming a $1 trillion tourism economy by 2047, generating employment and foreign exchange earnings.
According to the president, Hotel Association of India (HAI) and chairman, South Asia, Radisson Hotel Group, growth in building hotel room inventory should be the priority, at least to balance demand and supply challenges. “If we have to achieve the 2047 goals, we essentially need international investments,” he said.
Both noted that this would provide long-term financing at affordable rates and substantially support small and medium-sized ventures.
Another key aspect that the industry anticipates is the rationalisation of GST for hotels and restaurants, along with a lower GST rate on MICE (meetings, incentives, conferences, and exhibitions) for international segments and tourists.
As per HAI, reducing the 18 per cent GST on hotel rooms above Rs 7,500 to 12 per cent will help boost India’s hospitality sector and attract more international visitors to the country while giving it a competitive edge over other Asian countries.
Additionally, GST rates for hotel restaurants should be reduced to 12 per cent with full input tax credit (ITC). This will make them competitive compared to standalone restaurants, which enjoy a GST rate of 5 per cent without ITC.
“This approach would enable us to offset current expenses, increase capital expenditure, open more restaurants, and ultimately generate more employment and revenue for the government,” said director of operations at ibis and ibis Styles India.
The co-founder and chief executive officer (CEO), Yatra Online, corroborated Jose.
“Additionally, we urge the government to simplify GST compliance for online travel agencies by introducing centralised registration, reducing administrative overheads, and levelling the playing field for Indian players against global competitors,” he said.
The co-founder and CEO, Zo World and Zostel, added that introducing public-private partnership (PPP) models or incentivised schemes to develop new tourist destinations could unlock the untapped potential of many regions. Providing affordable land or tailored schemes for tourism operators could help create more diverse travel options and boost the sector’s contribution to the economy.
Industry experts believe that creating a digital single-window clearance platform for hotel licences, no-objection certificates (NoCs), and approvals will facilitate the ease of doing business.
The industry is also grappling with a slow recovery in foreign tourist arrival numbers to pre-Covid levels. According to him, India sends out three times more tourists on outbound tourism than inbound tourism.
“Investments in tier II and III city infrastructure and a renewed focus on global tourism campaigns, akin to ‘Incredible India,’ will further drive inbound tourism and balanced regional growth. These measures will empower the sector to emerge as a catalyst for India’s economic transformation,” he added.
As per the industry experts, the recent depreciation of the rupee against the US dollar increases the risk of a surge in airfares. The government could consider subsidies or exemptions on aircraft fuel. He also highlighted the need to boost the skilled workforce within the sector.
The CEO, Tourism and Hospitality Skill Council (THSC), said that increased allocation for skill development, apprenticeships, and digital transformation will empower the workforce, ensuring the industry is prepared for future challenges and opportunities.
“While significant work is already underway in these areas, there is still a road ahead to fully unlock the potential of this dynamic industry,” he added.
