Tour operators say GST issues, costly visa hitting overseas tourist business

  • 14-Sep-2018
  • Tour operators say GST issues, costly visa hitting overseas tourist business

Inbound tourists to India crossed the 10 million threshold for the first time last year but overseas inflow of tourists into the country for leisure travel looks muted this year. The Indian Association of Tour Operators (IATO), the apex body for tour operators and standalone travel agents and tour operators said business has been static year on year for tour operators catering to overseas tourists this year on account of GST and the lack of input credit, safety perceptions concerning India, the rise in e visa fee in July, state centric regulations and other factors. Standalone tour operators and travel agents that ET spoke to said business has declined or stayed static compared to last year. 

“Business for our operators has been static year on year and GST is the main factor. There is no input tax credit available for tour operators. There are also other factors like the seat capacity factor and expensive air seats. Flights from UK to Thailand are cheaper than UK to India and we are not competitive with international markets. We need to control these areas that are cost prohibitive. We are discussing all these matters with the ministry of tourism,” said Pronob Sarkar, president, IATO. 

Rajeev Kohli, joint managing director of Creative Travel, which specialises in inbound travel said legacy business for traditional source markets is down for his company. “We have ventured into new markets and that business has grown but our legacy business is down for the traditional source markets. Tour operators are not allowed to take input credit on the 5% GST tax while we are paying tax on hotels, transport etc. The end supplier should be allowed to take credit for the GST paid. This is not a viable proposition,” he added. 

The CAPA India Inbound Tourism report released this week stated that while total foreign visitor arrivals increased by 15.9% year on year in 2017, if visitors from Bangladesh were excluded (the vast majority of whom do not come from leisure) the growth was only 8%. India lost market share in five of the 10 source markets over the past three years particularly in the UK, France and Sri Lanka as per the report. CAPA estimates that only 2.4-2.6% million people visit India each year for the purpose of a holiday which is far less compared to a city state like Singapore or the island destination Bali or Thailand at 31 million. 

R Parthiban, director at Delhi headquartered Swagatam Tours which has offices in Mumbai, Chennai and Bengaluru said business for his company which caters to visitors from markets like the US and UK has been static because of many factors. “The government takes one step forward and two steps backwards. Without any intimation to the tour operators they have increased the visa fee to $ 80 from $ 50 in July this year. This is becoming a burden. The structured tourism promotions are not there,”he said. 

“From January onwards they have closed down 7-8 tourism offices. For the entire Europe, they have one office in Germany. They have said there will be more aggressive promotions and agencies involved. But, they should ensure other steps are ready before closing the existing channels,” he added. 

Akshay Kumar, CEO of Mercury Himalayan Explorations, which specialises in adventure travel for tourists in markets like the UK said business from markets like Australia has registered a dip while the UK market has been muted. “The multiplicity of taxes within tourism for transport, hotels and restaurants is complicated. The smaller operators are feeling the hit as they are finding it difficult to comply under the regime. There have also been state centric bans and regulations around adventure travel.”


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