CII said the new tourism policy should accord infrastructure status to the sector in order to encourage and involve the private sector. Export status should also be extended to all tourism units irrespective of their annual turnover and not be restricted to units with turnover of Rs 6 crore and above.

Unless the tax structure is rationalised and multiplicity removed, India will lose out on inbound tourism to other South Asian countries which, in the post Asian currency crisis, are offering far cheaper destinations, said CII deputy director general M Roy.

CII has suggested that Central taxes should be abolished wherever an equivalent state tax exists and vice versa. "A proper mechanism should be worked out so that the revenue is proportionately shared between the Centre and the states. The problem regarding wide diversity in state taxes needs immediate attention", said Roy.

CII said since there exits a central hotel expenditure tax, state luxury taxes need to be rescinded altogether and in case it is not possible, a reasonable five per cent luxury tax be uniformly levied in all states.The luxury tax should also be exempt from payments made in foreign exchange and the service tax should be applicable to establishments that do not pay expenditure and sales tax, said CII.

Roy pointed out that tourism in India was the second highest foreign exchange earner. The travel and tourism economy that accounts for 5.6 per cent of the GDP supports 5.8 per cent of the total employment and generates 10.8 per cent of the total exports from the country.

The beneficial aspects of promoting tourism for the tremendous multiplier effects of this industry in terms of employment and revenue generation need not be stressed, said Roy.

"The government support to this industry has always fallen short of its expectations. The government support to tourism has been only one per cent of public spending as against a global average of 6.8 per cent", said Roy.

Even the capital investment into tourism industry is a paltry 6.4 per cent of the GDP compared to the world average of 11.8 per cent, Roy added.CII said that use of information technology in promoting and marketing Indian tourism should be taken up in a major way. The concept of starting duty free shops in places other than airports, which has been experimented in the Capital, needs to be repeated in other metros and major tourist cities.

Non-core activities in all airports, major stations and inter0state bus terminuses such as cleaning and maintenance, luggage transportation and vehicle parking facilities, among others should be opened up to the private sector to increase efficiency and profitability, added CII.

CII's pill for all that ails the tourism sector:
* Accord infrastructure sector status
* Rationalise tax structure and remove multiplicity
* Export status to all units irrespective of annual turnover
* Single window clearance at Centre and state levels
* Abolish visa for top 3 tourist-generating countries
* Reserve land for hotels and tourism related projects.