While there were not much specific takeaways in the budget for the travel, hospitality and fashion industries, companies are drawing solace from the overall infrastructure push that it promises
TRAVEl
The Budget has cut taxes on travel and tourism and given more incentives to the $210 billion sector and government sources, hoping to boost economic growth and create more jobs. The move could add to a domestic tourism boom in the world’s second most populous nation, where low inflation and rising incomes are changing lifestyles and consumption patterns of an estimated 250 million middle-class Indians.
Peter Kerkar, CEO, Cox and Kings feels the government’s move to develop 10 prominent tourist sites as iconic tourism destinations would create tourism clusters. “Along with this, the move to upgrade tourism amenities at 100 ASI managed monuments will enhance the visitor experience. All this will generate huge economic activity as it also involves infrastructure and skill development in the region. Tourism is the largest employment generator in India and this will open up huge employment opportunities.The move to expand the UDAN (Ude Desh ka Aam Nagrik), to over 56 unserved airports and 31 unserved helipads will open up huge opportunities for the travel industry as connectivity will improve and people in these areas will be able to travel seamlessly within India and overseas, thereby giving a boost to domestic and outbound tourism.Overall, the thrust of this budget is on infrastructure development which is what the tourism industry has always represented to the government. New tourism circuits can only come up if there is adequate development and this budget lays emphasis on it. Finally, giving a boost to the rural economy will also enhance the purchasing power amongst those living in rural areas and this in turn will stimulate travel. We have observed this over the last couple of years.”
Balu Ramachandran, Head of Air and Distribution, Cleartrip, said, “India has achieved the position of being the fastest growing domestic aviation market in the world. Airport capacity addition is most imperative to ensure that the growth impetus does not hit an infrastructure roadblock and it is heartening to see the government backing up the ambitious UDAN plan with budgetary provisions for airports.”
FASHION AND TEXTIlES
The garment and textile industry, the second largest employment provider after agriculture in India, had high hopes about easing their troubles.The industry has been facing the heat of government policies, be it is GST or demonetisation. Both the policies hit hard the labour-intensive and cash-dependent industry. Allocation for textile industry increased from Rs 6000 cr to Rs 7148 crore.
FDCI president Sunil Sethi feels the allocation to the textile sector is worthwhile provided it percolates to the weaver.“What excites me most is the fact that if your business is under Rs 250 crore, the corporate rate is down to 25 per cent. That is a big advantage for me because at the end of the day, people need to pay taxes and people should have a premium in the market. This is what I believe in and its the right thing as well to reduce the corporate tax. The money allocated to the textile sector is fantastic as long as it helps in allevating the status of the weavers. Over the years, I have seen that if handloom and textile industry is the second largest employer in the country, then there is reason to pump in more money in this because that is what is required. The fashion fraternity has always been ahead in doing design intervention with the textile industry and weavers. It also happened last night at the NIFT show which was all about textile and the direction in which Indian handloom is going. With the budget, as long as the money comes directly to the right people, it is a good move.”
HOSPITAlITY
The restaurant sector was seeking re-introduction of input tax credit from the government in addition to reduction in number of licences required for operating a restaurant but it didn’t materialise.
NRAI president Rahul Singh draws heart from agri input benefits though there is no major takeaway for the hospitality industry. “The potential for agri and food products is very high and we haven’t harnessed it. I am related to the restaurant industry and from a food survey sector point of view, we don’t see anything that had any change. So it’s status quo as far as we are concerned. What we have always expected was not to have the discrimination of our industry being singled out for the allowance of input tax credit which has been a problem we have been talking about. This is the only industry in India where input tax credit has been disallowed. We were hoping that this could be reinstated but that has not been done.
BEAUTY
Shriti Malhotra, COO, The Body Shop India, thought the Budget was a mixed bag. Said she, “With reduced and simplified GST on cosmetics, the industry is upbeat and looking forward to policies that facilitate business. We are optimistic of growth-enhancing measures for the beauty sector and positive changes in the overall economic scenario. A hike in customs duty will definitely impact the sector negatively. However the exact implications will have to be understood, once the policy details are known.”
INFOTAINMENT & MEDIA
Mitesh Shah, Head of Finance, BookMyShow said, “The Union Budget 2018 is both populist as well as pragmatic. It focuses on growing the promising rural economy and extending digitalisation to rural citizens which can yield great results in the form of increased household rural consumption, and thereby providing internet-driven businesses with a great potential market opportunity to tap. Increasing allocation for digital India and the overall strong thrust on digitalisation is a welcome step. Initiatives such as high speed connectivity and Wi-Fi access to 5 crore rural citizens and tax disallowance on cash expenditures above Rs 10,000 for all entities will give digital movement a great push and will benefit internet businesses. However, some more direct incentives for promoting digital ecosystem in form of lower MDR or cashbacks would have been welcomed by online platforms as well as merchants. The move to levy 10 per cent lTCG is commendable in the larger interest of the economy and fiscal situation. Another significant change proposed in the budget is inclusion of ‘Significant Economic Presence’ in the definition of ‘Business Connection’ whereby even digital presence of non-resident enterprises in India through digital platforms shall be construed to be taxable presence irrespective of whether or not the non-resident has a place of business in India or render services in India.
“This provision will bring about paragon shifts in nexus rules under DTAA. There is also positive news for startup ecosystem as the benefit of dedication u/s 80-IAC is extended to startups incorporated even after 1 April . The budget also brings lot of clarity around tax administration and rationalisation as well as relief from MAT for companies admitted under insolvency resolution process. With 99 per cent of corporates now being covered under the reduced corporate tax rate of 25 per cent, the finance minister has substantially lived to the commitment of rationalising corporate tax made in 2015.”