Budget 2025: Hospitality Sector Calls For Tax Reform, Infrastructure Status, And Investment Boost

Highlighting the issue of taxation, Kachru criticised the differential tax rates across the country and called for rationalisation in line with global best practices.

Ahead of the Union Budget 2025, Hotel Association of India (HAI) President K. B. Kachru has outlined critical reforms needed to transform India’s hospitality sector into a global powerhouse. Speaking to PTI, Kachru highlighted the who, what, when, where, and why of his appeal: the hospitality sector’s urgent need for infrastructure status, tax rationalisation, and better marketing strategies to attract global tourists. He also called for private sector investments, streamlined approvals, and improved visa processes to make India a more competitive destination.

Infrastructure and MICE Opportunities

Kachru underscored the importance of developing world-class infrastructure, especially for MICE (Meetings, Incentives, Conferences, and Exhibitions) destinations. “We need investment. Investment can’t be done by the government alone. Private sector has to come in and invest. What would motivate them to invest is they must have a respectable ROI; then only will they invest,” Kachru said.

The government’s earlier announcement to develop 50 new tourist destinations as complete tourism packages was praised, but Kachru urged that these destinations be supported with incentives for building hotels, entertainment centres, and convention halls. “If there’s a project worth ₹10 crore, it should also be part of the industry. We cannot say it can’t be done,” he remarked.

Tax Rationalisation and Industry Status

Highlighting the issue of taxation, Kachru criticised the differential tax rates across the country and called for rationalisation in line with global best practices. He cited examples from Singapore, Sri Lanka, and Thailand, where supportive taxation policies have propelled tourism growth.

“Taxation is a big issue. If we rationalise tax rates, it will create a more favourable investment climate,” Kachru said. Additionally, he stressed the need for state governments to grant the hospitality sector industry status, which would allow hotels to benefit from reduced electricity tariffs and easier access to loans.

“If we give it infrastructure status, the loans will be at a decent rate, as given to all other industries. We’re not asking for more,” Kachru noted. He also pointed out that while the number of licenses required to start a hotel has been reduced significantly, further efforts are needed to simplify the process, ideally through a single-window approval system.

Tourism and GDP Growth

Kachru drew comparisons with countries like Thailand, where tourism contributes around 25 per cent to the GDP, while India lags at just 6 per cent. He emphasised the need for India to capitalise on its untapped tourism potential by marketing the country more effectively on global platforms.

“Countries like Japan, South Korea, and Thailand have grown their GDP by giving importance to tourism. We need to learn from them,” he said.

Streamlining Visa Processes

Another critical reform suggested by Kachru was an easier visa process to attract international tourists. Simplified visa procedures, he argued, could significantly boost inbound tourism, creating jobs and driving economic growth.

As Finance Minister Nirmala Sitharaman prepares to present the Union Budget on 1 February 2025, the hospitality sector hopes for bold reforms to unlock India’s tourism potential. By addressing taxation, infrastructure, and investment barriers, the government can position the industry as a key driver of GDP growth.

Kachru’s vision is clear: with supportive policies, India’s hospitality and tourism sector can compete with global leaders, contributing significantly to the country’s economy while creating a vibrant ecosystem for travel and leisure.