FICCI in its pre-budget memorandum has reiterated that in the list of Infrastructure projects, hotels may be added just like Railways and Airports. Under Section 10 (23G) of the Income Tax Act, Hotels were added to the infrastructure list so that interest received by Financial Institutions and banks for loans extended to hotels were tax exempted, however the said was discontinued from 1st April 2007. 

Grant of Infrastructure status to the Hotel industry will lead hotels to re invest their profits in the hospitality sector, channelize huge investment in the tourism sector and help bridge the shortfall of hotel rooms. 

There is a shortage of 1,50,000 rooms that calls for an investment of around Rs 60,000 crores in the coming 5 year period. This investment will lead to substantial employment generation which stood at nearly 49 million as per 2007-08 data. 

FICCI has also given the following recommendations for the hotel and tourism industry: 

>> RBI's Infrastructure Lending List: Hotels must be included in RBI's Infrastructure Lending List. By including hotels in RBI's infrastructure lending list, the following benefits would accrue to hotels: 

> Higher debt equity ratio of upto 4:1; 
> Term repayment tenures of upto 15 years instead of 10 years as at present which is totally inadequate for the capital intensive hotel sector; 
> Lower interest rate on term-loans compared to the present interest rate regime; 
> Availing of 'Takeout Financing' extended to the infrastructure sector; 
> Issuance of infrastructure bonds; 
> Availing of ECBs of upto US$500 million. 

(You need to login first to read complete news).
New User? Register for FREE!
» Back to Travel News