Once approved in the PM headed NDC, the proposal may
form part of next year's budget announcements. The proposal
comes in the wake of acute shortage of hotel rooms acting
as a spoiler for country's booming tourism. At present,
India faces a shortage of 150,000 rooms.
According to government estimates, foreign arrivals
in India increased 85.8% to 4.4 million in 2006, up
from 2.4 million in 2002. India received over Rs 29,600
crore ( US $ 740 million) as foreign exchange revenues
from tourism in 2006 registering a growth of 17.6% over
2005.
With high occupancy rates forced by country's acute
room shortage, tariffs have hit the roof over last three
years even among lower star categories. "Hence
tax sops have been proposed to kick-start rapid development
of hotels to take on the influx of tourists into India,"
a government official said.
Fresh tax concessions were allowed in the Budget 2007-08
to promote infrastructure facilities. A five-year holiday
from income tax was allowed for two, three or four star
hotels in the National Capital Region (NCR) including
Faridabad, Gurgaon, Ghaziabad or Gautam Budh Nagar.
The step was aimed at meeting the requirement of 20,000
additional hotel rooms for the Commonwealth Games, 2010.
The government now feels that same sops to should be
extended to hotels across the country to meet shortage
of rooms.
The proposal would place hotel projects at par with
other infrastructure projects. Infrastructure status
for the tourism sector has been a long pending demand
of the industry. However, the finance ministry has not
blessed it yet.
According to a report by hospitality consultants HVS
International, average room rates among three-star hotels
grew 22.4% from fiscal 2004 to fiscal 2006, to Rs 2,044
(US$50) per night. One reason for this has been shortage
of rooms, especially during peak tourist season.
Apart from tax holiday, government may also consider
special incentive for hilly areas, rural areas, places
of pilgrimage, North Eastern region including Sikkim,
J&K, Uttranchal and Himachal Pradesh. A subsidy
would be offered on the basis of room created in these
areas.
http://economictimes.indiatimes.com
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