Ahead of Budget, hospitality sector calls for reforms, simpler norms

As February 1 approaches, the hospitality sector is pinning its hopes on Finance Minister Nirmala Sitharaman to include reforms -- which can foster growth and sustainability in the hospitality and tourism industry -- in the upcoming Union Budget.

As one of its key demands, the Federation of Hotels and Restaurants Associations of India (FHRAI) has sought infrastructure status for hotel and convention centre projects costing Rs 10 crore or more.

Under the current criteria, hotel projects must exceed Rs 200 crore and convention centre Rs 300 crore to acquire infrastructure status, making it inaccessible to smaller projects that dominate the Indian market.

The industry has also called for simplifying licensing and approval processes through a single-window clearance system to encourage investment in the hospitality sector. Stakeholders have claimed that the complex licensing requirements hinder investments . A move towards single-window clearances would simplify business operations, reduce costs and minimise delays.

They have further called for the rationalisation of GST rates on hospitality services. "The present GST structure -- among the highest in the world -- makes India less competitive than its neighbouring countries," industry  stakeholders claimed, recommending delinking of the GST on restaurants from room tariffs in hotels and restructuring GST rates for restaurants, banquets and events.

The industry has also emphasised the need for reforms in excise and liquor licensing rules, which are currently complex and involve high fees. The hospitality industry suggests a simplified process, similar to the FSSAI registration system, with nominal fees, to help businesses in complying with guidelines, while meeting the growing demand for leisure and entertainment services.

“These reforms will create a more competitive and sustainable environment for businesses, which will, in turn, will help India position itself as a global leader in tourism,” said K Syama Raju, president of FHRAI.