Budget 2014: Travel companies bat for FDI in railways, tax relief on jet fuel

New Delhi: Lowering of taxes on jet fuel, hotels and holiday packages are among the top demands of the travel industry, which has asked the government to initiate bold measures like FDI in Railways to promote tourism and travel in a big way.

"We look forward to some fundamental changes that will give the travel and tourism market a big boost. There is a pressing need to review taxes on air travel, which is probably the most heavily-taxed product in the country, where the tax component of airfare often exceeds the underlying price of that ticket," said Rakshit Desai, Managing Director (India) of travel management firm FCm Travel Solutions. Sharat Dhall, President of travel portal Yatra.com, pleaded for moves to introduce foreign direct investment in Railways, saying it "will help infuse greater effectiveness and efficiency in India's dynamic tourism industry". He also listed issues like relaxing of taxes on aviation turbine fuel (ATF) to "boost cheaper air travel" and sought a re-look at the service tax on holiday packages, saying the industry was "optimistic that the budget will include reforms which will help boost the tourism industry in India".

Supporting FDI in Railways, MakeMyTrip's co-founder and CEO Rajesh Magow also suggested 100 per cent FDI in the case of airlines. As the operating costs were "disproportionately high" for airlines, government should help by reducing fuel surcharge and rationalising airport charges. Noting that the government has already announced that tourism was of high priority for it, Desai also suggested that it should revisit the Leave Travel Allowance (LTA) and make international air travel exempted from income tax as in the case of domestic travel.

"With growth in foreign exchange reserves and some degree of stability in currency exchange rates, the government could look to enhance amounts availed by individual travellers under the Basic Travel Quota," the FCm Travel chief said. Magow recommended tax holidays for the hotels sector, saying such moves would benefit the sector as there were currently about 3,00,000 hotel rooms in India, which was not at all enough to create growth in the travel and tourism sector.

Stressing on the need for increased investment in tourism infrastructure, he also suggested promotion of entertainment tourism through theme parks and other projects like in foreign destinations which attract tourists in large numbers.