But while one section of the industry has suggested a levy of 3 per cent tax on room rent of hotels to create the fund, the other section has demanded a more equitable distribution with government participation.
The Oberoi group chairman PRS Oberoi says, Now that the 10 per cent hotel expenditure tax (HET) on room tariffs has been removed, I suggest a 3 per cent levy on room charges be introduced. The proceeds of this levy should not go to the exchequer but should be placed in a separate India Promotion Fund. A carefully selected committee of individuals from tourism sector and the government should decide on the best use of this fund.
However, a section of industry feels that creation of a tourism promotion fund will essentially benefit the upper-end segment of hoteliers as it will be meant to attract foreign tourists; hence it should be extended to all beneficiaries including tour operators, travel agencies, airlines, entertainment sector.
The Federation of Hotel & Restaurant Association of India (FHRAI), which represents 1800 hotels of the country, is yet to take an official stand on this issue.
FHRAI secretary general Shyam Suri says, My personal view is that 3 per cent of foreign exchange earnings of all travel industry players should be contributed to the fund and it should be recompensated by giving a rebate on forex earnings.
But another section of industry feels that such a fund must be created by the government. It is a worldwide practice. Tourism brings indirect benefit to every industry besides making a positive contribution on employment front, says International Travel House managing director Anil Bhandari.
In 2000, the Tourism Ministry had proposed Tourism Development Fund to promote tourism. The Department of Tourism was proposed to provide the initial corpus. But the idea of setting up of Tourism Development Fund has been dropped as it was felt that critical infrastructure development can be made through budgetary support of the department and a separate fund would not be necessary for this, a tourism ministry source said.
A proposal to create tourism promotion fund is, however, pending to be introduced in Parliament.
A group of experts believes that even industry may take the lead in this direction. A beginning must be made. Anything that go into promoting India will be insufficient. All must contribute for tourism development, says Welcom Heritage president Rakesh Mathur.
However, the Grand group of hotels CMD Lalit Suri does not believe in further taxing the ailing hospitality industry. Prime Minister Atal Bihari Vajpayee had announced that a tourism development fund will be created to promote the sector. We all have to work in this direction to make it a success.
World Travel & Tourism Council (WTTC) president Jean-Claude Baumgarten cautions the government against imposing any tax on the industry, Worldwide such a policy bore negative results. The government must come forward to create such funds as tourism accelerates economic development, says he.
Confederation of Indian Industry (CII) and Federation of Indian Chambers of Commerce & Industry (Ficci) has already stressed on the need to create a fund to promote tourism. Funds are required to create tourism infrastructure and promote country overseas. We hope for a positive response from the government, CII deputy director general M Roy said.