§ t?p 10 sect?rs in india t? attract

§  The
t?urism and h?spitality industry in india has been witnessing a healthy gr?wth
and acc?unts f?r7.5% ?f the GDP ?f the c?untry. Acc?rding t? a KPMG rep?rt, the
h?spitality sect?r is expected t? gr?w at 16.1% CAGR and will reach Rs. 2,796
th?usand cr?re in 2022. With an increasing middle class and disp?sable inc?me,
this sect?r has been witnessing a p?sitive gr?wth f?r a few years. The sect?r is
a maj?r j?b pr?vider acr?ss the terms, directly as well as indirectly. it als?
attracts the m?st FDi infl?w and is an imp?rtant net f?reign exchange earner f?r
the c?untry. The h?spitality sect?r is a maj?r c?ntribut?r t? the indirect tax
revenues at the State as well as the Central level, which includes revenues fr?m
Service Tax, VAT and Luxury Tax. 1

§  The
t?urism and h?spitality sect?r is am?ng the t?p 10 sect?rs in india t? attract
the highest F?reign Direct investment (FDi). Acc?rding t? the data released by
Department ?f industrial P?licy and Pr?m?ti?n (DiPP), the h?tel and t?urism
sect?r attracted ar?und US$ 9.2 billi?n ?f FDi between April 2000 and March
20162

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§  The
h?tel industry in india thrives largely due t? the gr?wth in t?urism and
travel. The Travel and T?urism industry c?nsists ?f multiple verticals which include
h?tels, airlines, and travel & t?ur c?mpanies. H?wever,this rep?rt f?cuses ?nly
?n the H?spitality Sect?r. Due t? the increase in t?urism with rising f?reign
and d?mestic t?urists, h?tel sect?r is b?und t? gr?w. There is an emergence ?f
budget h?tels in india t? cater t? the maj?rity ?f the p?pulati?n wh? seek aff?rdable
stay. internati?nal c?mpanies are als? increasingly l??king at setting up such
h?tels. imbalance in increase in t?urists b?th d?mestic and f?reign n?t been
supp?rted with equal number ?f r??ms is a latent s?urce ?f ?pp?rtunity f?r gr?wth.

§  The
gr?wth in the h?spitality sect?r and its c?ntributi?ns t? the GDP will c?ntinue
t? be substantially higher than ?ther sect?rs ?f the ec?n?my ?n the back ?f
huge t?urism p?tential in the c?untry. H?wever, the h?spitality sect?r is ?ne ?f
the m?st heavily taxed industries and is saddled with multiple layers ?f tax
such as VAT, service tax, luxury tax, etc. ranging fr?m 20 per cent – 30 per
cent. This multiple taxati?ns adds t? ?perati?nal c?sts and reduces pr?fitability.
While the ?perati?nalizati?n ?f the much awaited GST regime is expected t? rati?nalise
the taxati?n structure, bring a p?sitive ?utc?me with streamlined taxes,
enhance ease ?f d?ing business and l?wer c?st f?r the c?nsumers, there is an
urgent need f?r l?wering the tax levied, t? incentivize and attract m?re investments
t? the sect?r.

§  The
h?spitality sect?r has the p?tential t? be the main driving f?rce behind the gr?wth
?f the ec?n?my. it, h?wever, will be p?ssible ?nly with the right am?unt ?f
supp?rt and incentives fr?m the g?vernment in all categ?ries ?f h?tels and n?t ?nly
limited t? the luxury and ultra-luxury segment. i believe that the g?vernment
must pr?vide its full supp?rt in incentivizing the sect?r and the ?verall taxati?n
?n the h?spitality sect?r sh?uld be reduced t? stimulate its gr?wth
and make india c?mpetitive against ?ther internati?nally ren?wned h?spitality
chains

1 http://www.business2business.c?.in/article/821/The-C?ntributi?n-?f-H?spitality-industry-T?-Ec?n?my-Gr?wth

2 https://www.equitymaster.c?m/research-it/sect?r-inf?/h?tels/H?tels-Sect?r-Analysis-Rep?rt.asp

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