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FAITH proposes ‘PM -Holiday in India Export Support’ to foreign trade policy

September 16, 2022, New Delhi: FAITH, the policy federation of all the ten national associations representing the complete tourism, travel and hospitality industry of India – ADTOI, ATOAI, FHRAI, HAI, IATO, ICPB, IHHA, ITTA, TAAI & TAFI has proposed ‘PM – HINES’ or ‘Prime Minister – Holiday in India Export Support’ for the upcoming foreign trade policy to fast track tourism, travel and hospitality exports from India. PM – HINES is a combination of two existing similar support mechanisms of the government of encouraging duty-free exports and PLI scheme. On similar concept, to increase tourism, travel and hospitality exports from India, the organization is basing PM – HINES on two key market principles:

  • Drawback of all domestic duties, levies and taxes which have become implicitly built into the price of tourism in India.
  • Market linked Incentive based on increasing exports

Thus, the proposed formula for PM- HINES is:

  1. A) Domestic Duty Drawback: 5% of gross forex earnings from tourism travel & hospitality services as base drawback for all tourism exports.
  2. B) Market linked incentive:
  • 1 % additional drawback for forex earnings, if gross forex earnings are < US$ 50 million, in the financial year
  • 2 % additional drawback for gross forex earnings, if gross forex earnings are > US$ 50 million upto US $ 100 million in the financial year
  • 3% additional drawback for gross forex earnings, if gross forex earnings are > US$ 100 million upto US $ 200 million in the financial year
  • 4% additional drawback for gross forex earnings, if gross forex earnings are > US$ 200 million upto US $ 400 million in the financial year
  • 5% additional drawback for gross forex earnings, if gross forex earnings are > US$ 400 million + in the financial year.

Thus, any exporter of tourism travel & hospitality services will get the following duty incentive under PM – HINES as follows:

  • 6% of their gross forex earnings if gross forex earnings are upto $ 50 m in the financial year
  • 7% of their gross forex earnings if gross forex earnings are above $ 50 million upto $ 100 million in the financial year
  • 8% of their gross forex earnings, if gross forex earnings are above $ 100 million upto $ 200 million in the financial year
  • 9% of their gross forex earnings, if gross forex earnings are above $ 200 million upto $ 400 million in the financial year
  • 10% of their gross forex earnings, if gross forex earnings are above $ 400 million in the financial year.

This will immediately make tourism, travel and hospitality exports super competitive globally as tourism enterprises will use the drawback incentive to market internationally, to advertise, to build global partnerships and to reduce overall prices which will lead to much increases forex earnings and will also encourage more and more tourism travel and hospitality companies to invest heavily in people, product, infrastructure, which will further lead to increased jobs Pan India GDP growth and tax collections. Apart from this, it will also encourage global tourism enterprises to invest into India through the collaboration or JV route.

Pre – covid, India’s foreign exchange earnings from tourism were around $ 30 bn from around 11 mn foreign tourists and around 17 mn international travelers. FAITH believes that India has a vast unmet global tourism potential and has the inherent cultural, geographical, spiritual and people strengths to take its foreign exchange earnings from tourism, travel and hospitality to $ 200 bn + by 2035 and $ 100 bn by 2045. This has the potential to create almost 10 crore direct and indirect jobs by 2035 and almost 15 crores additional direct and indirect jobs by 2045.

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