Noting that high tax rates are hurting inbound tourism to India, a Parliamentary Committee has recommended that the tax regime for the travel and tourism sector should be reviewed to make India an attractive travel destination.
India’s total share in International Tourist Arrivals (ITA) remains a modest 1.24%, which is certainly below its huge potential, the Committee on ‘Promotion of Indian Tourism in Overseas Markets - Role of Overseas Tourist Offices and Indian Embassies’ stated.
“The Committee observes that one of the major reasons for India’s inbound tourism remaining grossly under-utilised has been the high rates and multiplicity of taxes that deter inbound tourism and have led to tourist packages being out priced vis-a-vis those in competing tourist destinations of other countries,” it said.
It added that the tax structure applicable to hotel accommodation, air travel, food and beverages consumption, not only leads to tourist packages being overpriced but also obstructs seamless flow of tourists to the country’s historical sites.
Despite inbound tourism being a major foreign exchange earner with foreign exchange earnings of over ₹2.11 lakh crore in 2019, it said, the taxes levied on the sector are among the highest in the country.
The Committee recommended a holistic review of the tax regime applicable to the travel and tourism sector so that India can convert its comparative natural and economic advantages into competitive advantages for the tourism sector.
Further, the panel said that focussed marketing and promotion efforts would go a long way in promoting growth of inbound tourism to India. It recommended that the Ministry of Tourism formulate an integrated marketing and promotional strategy to position India as a favoured tourism destination and increase India’s share of the global tourism market from the present 1.24% to 5% in the years to come.
The panel also suggested that Indian Ambassadors as leaders of Indian Missions abroad, must set targets for the growth of Indian tourism in key markets across the world to increase foreign tourist arrivals and increase the share of India in World Tourist Arrivals.
Lastly, the Committee ‘exhorted’ the government to create convergence and synergy among various ministries and stakeholders so that brand “Incredible India” can be promoted more effectively.
