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In the last budget, the hotel industry enjoyed a five-year
tax holiday for up to 4-star category. Convention centres with a 3,000+
seating capacity built around the Delhi - NCR region by 2010, the year
of Commonwealth games, were also extended this facility.
FHRAI, The Federation of Hotel & Restaurant Associations
of India now wants the provision to be extended to all categories of hotels
throughout the country that will open in the next 5 years, as an incentive
to ease the shortage of rooms.
As of Dec. 31 2007, there were fewer than 85,000 rooms
across all categories of hotels, according to the department of tourism.
FHRAI estimates that around 100,000 more rooms are needed to handle 10
million tourists expected from overseas by 2010.
About Rs.400 billion ($10 billion) would be needed to
build the additional rooms. An estimated 4.45 million tourists came to
India in 2006, a 13.5 percent increase over the previous year, according
to provisional figures announced by the tourism ministry.
The industry is also asking for a review of fringe benefit
tax on the corporate sector on money spent in hotels and restaurants and
a higher floor area ratio in Delhi and the National Capital Region. With
a higher FAR, the total number of rooms in a hotel is expected to go up
without additional land requirement.
Import Duties on Wines into India and the Budget
Meanwhile, rumours are once again doing the rounds that
the fincance ministry has finally decided to cancel the exemption of customs
duties on wines and spirits imported in India, presently granted to hotels
with foreign exchange earnings. A couple of major importers that delWine
talked to recently said under conditions of anonymity that they were 'absolutely
confident that the duty exemption are being withdrawn.' They concurred
with the view shared by most people that the hotels have failed to pass
on the duty saving benefits to the consumers.
This is not the first time the importers have failed
in make correct assessment, though. During the last budget, the feelings
were similarly strong. But the hotel lobby proved much too strong and
the hotels were left off. Even when the government increased the customs
duty for imports from 100% to 150% to snub WTO, the hotel industry was
left unscathed.
However, Maharashtra proved rather inhospitable to the
industry by slapping a 200% excise duty on all wine imports into Maharashtra,
without exception. After suspending their purchases till they consumed
most of their stocks, they have now shifted to stocking lower priced wines.
Any revival of customs duties will make even the cheaper imported wines
beyond most customers and will not help tourism.
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