Tourism ministry asks states to set up budget hotels through PPP

The Ministry of Tourism is encouraging state governments to establish budget hotels at tourist destinations nationwide through the public-private-partnership (PPP) model to assuage paucity of rooms.

“We are asking states, especially those in the North East, to set-up budget hotels through the PPP route. In such ventures, the state governments will offer land, while the private partners will pump in the money. Priority will be given to backward states with potential tourist destinations,” Union minister of state for tourism Sultan Ahmed said here.

Ahmed, who was speaking on the sidelines of a business summit organised by the Indian Chamber of Commerce, said that his ministry had already chalked out its policy, which included special incentives and tax waivers.

Declining to give details of the scheme, he said that the implementation would be worked out on a case-by-case basis subsequent to receipt of proposals from the respective states.

He added that, presently, there was a shortage of about 1.5 lakh rooms countrywide and states needed to partner with private firms to create adequate infrastructure for tourists. Incidentally, the Ministry of Tourism has a scheme of assistance for large revenue generating projects, under which PPP projects are eligible for assistance.

Under this scheme, subsidy can be provided up to Rs 50 crore, subject to a maximum of 25 per cent of the total project cost or 50 per cent of equity contribution of the promoters, whichever is lower.