Millions of jobs at risk as Indian tour operators cry for help

Historical Monuments Humayun's Tomb reopened to the public after Three Months in Delhi, Security guard mask, lock down coronavirus COVID 19

India’s tourism sector is in dire straits, and urgent relief from the government is needed to help tour operators survive the ongoing pandemic, urged Indian Association of Tour Operators (IATO).

IATO president Pronab Sarkar said that the sector, which contributes almost nine per cent to the country’s GDP, is tottering on the brink of collapse, putting millions of jobs at risk, reported Times of India.

Tourism businesses across India face existential crisis amid the crippling effects of Covid-19; Humayun’s Tomb in New Delhi, India which reopened to the public in July after three months of lockdown closure pictured

Waves of layoffs and furloughs have plagued the tourism industry, while remaining workers are getting less than 30 per cent salary, IATO said in a statement issued on Monday.

As such, IATO has appealed to the government for various relief measures, including a one-time financial grant of the gross salaries amount paid to the staff of tour operators on the basis of the balance sheet of fiscal year 2018-19 which has been submitted to the government authorities.

The industry body has also requested for the government to raise duty drawback under the Service Export India Scheme from seven to 10 per cent. “Such a measure would go a long way in alleviating the liquidity problem as the sector currently has zero billing and this would help tour operators to survive,” it said.

IATO has also sought amendment in rules with regards to granting of loans to MSMEs, as it claims that at present, only companies which have established relationships with banks are being offered loans.

“We understand the government finances are stretched, and therefore, the measures we have sought do not involve huge outgo from the government but if these relief (measures) can be given now, these can go a long way in providing succour to the stressed sector, failing which many tour operators would shut down,” Sarkar said.

On Monday, India surpassed Brazil to become the country with the second-highest number of Covid cases, recording more than 4.2 million confirmed infections. The high case tally, coupled with limited international flights, is keeping away inbound travellers, according to a GlobalData report.

The same report also stated that up until recently, even domestic tourism was not an option for most Indians as various states had restricted inter-state travel. While all restrictions on inter-state or inter-district movement have since been lifted, it will likely take a long time for tourist volumes to reach pre-Covid levels, it added.

Weighing in on IATO’s plea for government intervention, Animesh Kumar, director of travel and tourism consulting at GlobalData, said: “IATO comprises of 1,600 member businesses covering all segments of tourism industry and many of these businesses are smaller ones. The crisis poses existential risks to smaller players as they lack deep pockets to see them through the difficult times. A helping hand is indeed required for the survival of tourism industry in India.

“However, giving any type of direct financial aid may not be prudent. The Indian economy is not in a healthy state and it will put an additional burden. More importantly, the current cash flow crunch in the tourism industry is an issue created due to the crisis but it is not the root cause. The situation has arisen due to the pandemic and because people have almost stopped travelling. Instead of giving financial grant, it is more important for the government and the industry stakeholders to take steps to bring in inbound tourists.

Kumar cited examples of how travel-dependent economies across the globe have come up with innovative solutions like the SG Clean and Qatar Clean initiatives to boost consumer confidence, as well as implemented travel bubbles, pilot projects and incentive schemes to stir up travel demand.

He concluded: “Understanding and leveraging best practices from other countries/destinations is crucial for all stakeholders in India to come up with the right strategies for the survival and revival of the tourism industry. The government, on its part, must extend support to ease the immediate cash flow challenges through measures like interest-free loans, provident fund relief and GST exemption.”

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