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WTTC calls on India government to reduce taxes and improve visa policies

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David Scowsill, President & CEO, WTTC (World Travel & Tourism Council) has called on the Indian government to address the two biggest issues that are likely to hold back the growth of the country’s travel and tourism economy. “India is the 12th largest Travel & Tourism economy in the world and has the potential to become of the very biggest economies in our industry. Yet it risks squandering this opportunity through excessive taxation and restrictive visa policies,” said Scowsill at the Hotel Investment Forum India.

Scowsill said, “India is becoming increasingly expensive. Taxes are rampant in India’s aviation sector, indicating that the government views the sector as a revenue source rather than a revenue generator. But high taxation will potentially hinder the development of travel and tourism. It’s vital for the government to make further moves to reduce the tax burden on the industry.”

While IATA projects that the country’s aviation industry will be the fourth largest market for domestic passengers globally by 2016, driving profitable operations is still a challenge. There is current oversupply in the hotel sector in some key cities in India, which is reflected with decreases in the three key performance metrics (occupancy, average daily rate and revenue per available room) during the first nine months of 2012.

Scowsill continued, “We have seen encouraging developments in India, with attempts to liberalise visa procedures, such as the mutual easing of visa restrictions with Pakistan, the expansion of visas on arrivals to include Malay and Thai visitors and the ending or restrictions requiring a two month gap between re-entry for most visa holders. The WTTC welcomes these steps, which reflect positive government support for the country’s tourism industry, but there is much more to do between India and particularly the other G20 countries to remove these visa restrictions.

“Further measures to make it easier for travellers to enter the country are a key priority. Continuing the process of providing visas on arrival to more nationalities is one component in this progress. Along with easing visa restrictions, it is also important to make the visa process faster and ultimately electronic, so that travellers who want to come to the country do not face unnecessary obstacles in getting into the country.”

The total contribution of travel and tourism to India’s GDP in 2011 was 5.6 billion Indian rupees or 6 per cent of GDP and due to rise by 7 per cent in 2012. Over the next ten years, travel and tourism’s contribution to India’s GDP will grow by 8 per cent per annum, which is slightly higher than the rate of growth expected for the Indian economy as a whole.

In 2011 travel and tourism supported 39 million direct, indirect and induced jobs -that’s 5 per cent of total employment in India.  This amount is set to rise by 3 per cent in 2012 to reach 40.5 million jobs. Over the next ten years, travel and tourism jobs in India will increase by 2 per cent per annum to total 48 million jobs in 2022, in other words, 8 per cent of total employment in the country.