Conceived way back in 2007 during UPA-I era and announced in 2017-18 NDA Budget, proposed Special Tourism Zones (STZs) is now gradually taking shape at the ground level. Incidentally, the UPA-I Government had to shelve off the idea for setting up the STZ following opposition from the civil society.
However, following its announcement in 2017-18 Budget, the Union Tourism Ministry has started working for making it reality. It has decided to hold a competition — on the lines of the Smart City challenges which led to identification of 98 Smart Cities — soon asking people to help it identify specific exclusive areas/zones for intensive tourism development.
In this direction, the Ministry which will be the funding agency for basic core infrastructure in partnership with the States has floated a request for proposal (RFP) seeking appointment of a Consultant for analyzing the feasibility of the development of the STZs.
The move aims to give fillip to the tourism infrastructure in the country as Travel-related businesses such as hotels, restaurants, transportation, handicrafts and cultural shows will be given special incentives. Since, these are all labour intensive, the Union Tourism Ministry, which will oversee the project hopes this will also boost employment related activities.
The Zones which will also be connected with major railway stations, bus stand, airport, etc will be anchored as Special Purpose Vehicles (SPVs) that will be set up in partnership with the States.
However, incidentally, in November 2006, the National Tourism Advisory Council (NTAC), a think tank under the Tourism Ministry meant to advise it on policy issues, had floated the proposal of establishing almost similar STZs on the lines of Special Economic Zones (SEZs) to boost tourism and increase investment, employment and infrastructure in the country. The NTAC’s proposal to the Ministry suggested that STZs are to be located in tourist destinations, cities, along the coastline; Government should provide single window clearance for setting up of these zones; 100% tax exemption for a period of 10 years; each STZ should be able to provide 2,000 to 3,000 hotel rooms; facilities for shopping, entertainment; exemption from import duty on capital goods; Withdrawal of luxury tax, lower VAT etc; exclusive NRI tourism zones or elite world tourist zones for high-end global tourists.
However, the proposal never took off at the national level following opposition by the civil society around the country urging the Government to seriously reconsider its implementation.
Under mounting pressure, the Government in its statement in the Parliament and letter to the Chairman of the Parliamentary Standing Committee on Transport, Tourism and Culture had stated that that STZs had only come up as a matter of recommendation from the NTAC and that the Ministry was yet to take any decision with regard to STZs.