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The tourism industry is one of the key drivers of employment generation and inclusive growth in India. And, it could be made to be even more important as a sector of the economy with some push from Finance Minister Arun Jaitley in the upcoming Budget 2018.
According to the tourism ministry, the tourism sector accounts for 6.88 per cent of the country’s total gross domestic product (GDP), and 12.36 per cent of the total employment in terms of jobs. Therefore, it is imperative that the Narendra Modi-led central government would take important steps to nurture this industry.
In order to boost domestic and inbound tourism, the government should reduce the goods and services tax (GST) rate, which is 18 per cent on hotel rooms with tariff in the range of Rs 2,500 to Rs 7,500 a night. This is very high when compared with our competing destinations, so it is important that we rationalise this rate to stay competitive as an industry.
In order to grow the domestic and inbound Meetings Incentives Conferences and Events (MICE) industry, the government should develop MICE clusters in and around key metro cities and tourist destinations. That would help create an entire ecosystem for the MICE industry to flourish.
Also, for outbound tourism, GST should be applicable only to services rendered in India, and not on the entire outbound tour package value. At present, this increases the cost of holiday and appears to be unfair on customers, who are forced to pay taxes for services that they are not consuming in the country.
The author is group CEO of Cox & Kings