FHRAI delegates meet with tourism MSME ministers

High-ranking delegates from the former Indian Hospitality Association – Federation of Hotel & Restaurant Associations of India (FHRAI) met with Tourism Minister Prahlad Singh Patel and Minister for MSME Nitin Gadkari to discuss the deteriorating condition of the hotel and tourism industry and to discuss immediate tax measures recommended to save it from the upcoming collse.

The association presented presentations suggesting important policy changes to revitalize the sector. The FHRAI was represented by Gurbaxish Singh Kohli, Pradeep Shetty, DVS Somaraju and Narendra Somany. The delegates praised the ministers for the dire situation in the industry due to the two lockdowns.

The association representatives also met and forwarded the presentation to Arvind Singh, Secretary of the Ministry of Tourism, and Rakesh Kumar Verma, Joint Secretary of the Ministry of Tourism. The association also recently held a virtual meeting with the main economic advisor, Ministry of Finance Sanjeev Sanyal, with specific recommendations for the hospitality industry.

The Ministry of Tourism recognized the industry’s concerns and assured that the necessary aid to support the hospitality industry will be expanded. It has also assured that the issues and recommendations of the sector offered by the FHRAI delegates will be discussed with the Prime Minister and the Treasury Department.

The Ministry of Tourism is closely monitoring the SEIS program with the Ministry of Finance and other issues are discussed individually with the respective Ministries. The MSME Minister has also expressed that he is aware of the difficulties in the sector and that he will take positive account of the concerns of the sector regarding the ECLGS program and the RBI’s resolution framework. Sanyal has also expressed that they will consider the demands of the industry benevolently at the earliest.

The association thanks Prahlad Patel, Nitin Gadkari, Sanyal, Singh, Verma for their valuable time and for their understanding of the concerns of the industry.

Gurbaxish Singh Kohli, Vice President of FHRAI said, “The pandemic has devastated the hospitality industry, businesses are closing and NPAs are increasing. At our meeting with ministers, we recommended a well-done sectoral stimulus package that addresses the key aspects of reducing financial losses, mobilizing credit and maintaining jobs. The recommendations include the complete waiver of interest on loans from March 2020 until business normality resumes, the announcement of special measures for the industry and the interest charge on loans that are borne by the state for a certain period of time, monthly basic salaries that are directly related to tourism, travel – and hospitality employees who have lost their jobs due to the pandemic, provision of a moratorium of 3 years on the main loan amount, working cital support at interest on the fixed deposit rate plus 2 percent or MCLR rate, urgent release of SEIS outstanding payments, removal of secondary condition in the EPCG and introduction of a long-term financing program for at least 10 years, which is secured with a guarantee from the central government to banks and NBFCs. ”

Total industry sales for FY 2019-20 were Rs 1.82 lakh crore and we estimate that approximately 75 percent of the industry’s sales were wiped out in FY 2020-21. That is more than Rs 1.30 lakh crore of revenue for the Indian economy. The total outstanding loan to the hospitality industry is now over Rs. 60,000 billion.

Pradeep Shetty, joint secretary of the FHRAI, said: “As of ril 2021, revenues have not even exceeded 8-10 percent. Our right to do business has been withdrawn, but the right to reclaim credit and charge interest from our lenders is granted. The hospitality industry is under tremendous cash flow pressures to meet its operating expenses, including paying salaries and wages, making repayment obligations to banks and financial institutions, and funding its government spending plans. We are demanding timely payment of cash flows under the SEIS program and reimbursement of income tax payments owed to the hospitality industry. This will have a major impact on the hotels ability to pay the industry workforce, cover operating costs and manage loan repayment obligations. ”

The association has proposed a waiver or relaxation under the EPCG program. Regarding Average Foreign Exchange Earnings (FEE), it has been stated that the industry does not have FEE to redeem the license as there has been no overseas travel in this pandemic. Even before the pandemic, foreign arrivals and spending were bleak and the EPCG conditions could not be met, so the condition should be completely lifted and the conditions considered met and met. It has also suggested that foreign tourists visiting India staying and spending in hotels should be treated as hotel-earned currency in order to redeem the EPCG license. Even during the pandemic, the association applied for exemptions or exemptions for greenfield hotel projects and the expansion of existing hotels by releasing the bank guarantees and the corresponding FDRs and IGST.

Due to financial losses, 40 percent of the country’s hotels and restaurants have closed permanently and about 20 percent have not fully opened since the initial lockdown. The remaining 40 percent continue to make losses. The financial institutions have marked the industry in the negative list.

DVS Somaraju, Treasurer, FHRAI, said: “The industry is facing indescribable financial problems. It is imperative to allocate additional funding under the ECLGS and align the tenure and moratorium facilities of ECLGS 1.0 and 2.0 with ECLGS 3.0 to support the sector’s survival efforts. We have requested the provision of a special window for restructuring the sector without any credit risk. We have also requested the government or RBI to set up a redress forum to resolve problems the hospitality industry is facing when it comes to drawing on loans for restructuring. As the federation is hardest hit among other industries, the federation has proposed several steps in support of the revitalization of the sector that will be vital to the long-term health of the sector and the country’s economy. “


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