Visa on arrival a game-changer for tourism industry

Finance minister Arun Jaitley's proposal in the budget to extend the visa on arrival facility to 150 countries from 43 at present in a phased manner is set to increase the tourist inflow and benefit the local industry manifold, experts said.

Foreign Tourist Arrivals (FTAs) in 2014 reported a growth of 7.1% to 74.62 lakh compared with FTAs of 69.68 lakh in 2013, which was, in turn, a growth of 5.9% in 2012.

Peter Kerkar, director, Cox & Kings, said, "The extension of electronic travel authorisation (e-visas) to 150 more countries is a positive step for tourism as this sector contributes 7% of India's GDP and helped create more than 40 million jobs last year.''

Hari Nair, founder & CEO, HolidayIQ.com, a travel portal, said, "Visa on arrival being extended to 150 countries is a huge step for Indian tourism. In addition, tourism is a sector that is a beneficiary of improvements across multiple areas. The focus on areas such as infrastructure, skills development and rural development has the potential to provide a big tailwind for tourism."

Rakshit Desai, managing director India, FCm Travel Solutions and Flight Shop, said, "The announcement is a welcome measure. Further, ease of doing business initiatives like a single clearance window will foster an environment of business growth and encourage inflow of investments."

Jaitley also said that the facilities at the country's 25 cultural world heritage sites were deficient and resources would be provided to start work such as landscape restoration, signage and interpretation centres, parking, access for the differently abled, amenities including security and toilets, illumination and plans for benefiting communities around them. The heritage sites include churches and convents of old Goa, Hampi in Karnataka, Leh Palace in Ladakh, Varanasi temple town in Uttar Pradesh, Kumbalgarh and other hill forts of Rajasthan.

Rajesh Magow, co-founder and CEO-India, MakeMyTrip, said, "Executed and then marketed rightly, this will undoubtedly attract a new set of inbound tourists to the country. Investing in local infrastructure will promote the overall Indian tourism industry."

Neelu Singh, COO, Ezeego1.com, said, "We are happy with the thrust on domestic and inbound tourism by developing key tourist destinations and sites and making them more tourist-friendly. It will help draw a lot of heritage and religious tourists. The government has highlighted the desire to incentivise cashless transactions which is a positive development for online sites such as Ezeego1.com."

However, the increase in service tax from 12.36% to 14% will have negative impact on the industry and is likely to push up the airfares, feel experts.

Sajid Khan, country manager, India, South African Airways, said, "The announcements to restore and preserve the 25 cultural world heritage sites in the country by building visitor amenities is likely to aid tourism to historical locations. However, inclusion of entertainment facilities like amusement arcades, theme parks, water parks, concerts, etc in the negative list for service tax restricts such establishments from fully reaping the benefits of the growth in tourism. Additionally, proposed changes to increase service tax rate plus education cess and secondary and higher education cess to 14% will lead to a hike in air ticket prices."

Bharat Malkani, president, Hotel and Restaurant Association (Western India), said, "In the budget 2015-16, the government has proposed the increase in service tax. According to us, it is an irrational inclusion in the ever increasing tax list and additional burden on the industry. This is directly going to impact the customers."

On the other hand, the aviation sector expected rationalisation of taxes on aviation turbine fuel (ATF), which ranges between 2% and 40%. While the expectation was dashed once again, there was also no mention of incentives for development of maintenance repair and overhaul (MRO), airports and general aviation in the country.

Captain GR Gopinath said the budget was a let-down as it has done nothing to make the Indian aviation sector competitive. "Aviation sector goes hand-in-hand with railways, roads and shipping. All four are pillars of the economy but the government hasn't treated it as such," he said.

Amber Dubey, partner and India head, aerospace and defence, KPMG, said, "Higher service tax will enhance airfares. Loss of MRO revenue, jobs and taxes to Sri Lanka, Asean and Gulf countries will continue. Positives include extension of visa on arrival to 150 counties and development of heritage sites."