While the government wants to double foreign tourist arrivals from the current 10 million by 2025, it appears a difficult task. Here's why (1/n)
An additional 180,000 guest rooms are required to cater to such a volume - the present inventory is 120,000 rooms. At an average capital expenditure of Rs 1 crore per room, an estimated amount of Rs 180,000 crore would be required.
Mobilising this sort of capital is challenging for the industry in the absence of benefits. The industry has been demanding infrastructure status to hotels when the project cost is Rs 50 crore and above, from the current threshold of Rs 200 crore now.
Another bottleneck is high GST rates on luxury hotels. A unit of accommodation of Rs 7,500 and above per day is taxed at 28 percent. Tourists find this "oppressive" in comparison to other "tourism-minded countries" who charge zero to 12 percent.
The single window clearance mechanism for projects is not really single window. Any project requires 20 or more permissions from state departments and agencies. That is time-consuming and isn't easy.
