Government support crucial for revival of tourism industry in India, says GlobalData

Following the news that the Indian Association of Tour Operators (IATO) has urged the government to provide relief to the tourism sector that is in dire straits due to COVID-19;

Animesh Kumar, Director of Travel and Tourism Consulting at GlobalData, a leading data and analytics company, offers his view:

“Tourism industry is among the worst impacted industries due to the COVID-19 pandemic and all sectors including airlines and hospitality have been severely impacted. India, with over 4.2 million confirmed cases, is only behind the US in terms of the number of confirmed COVID-19 cases. High number of cases coupled with limited international flights is keeping away the inbound travelers. Till few days ago, even domestic tourism was not an option for most Indians as various states had restricted inter-state movement of people. While under Unlock 4, all restrictions on inter-state or inter-district movement of people have been removed, the tourist volumes are likely to take a long time to reach pre-COVID levels.

“IATO comprises of 1,600 member businesses covering all segments of tourism industry and many of these businesses are smaller ones. The crisis poses existential risks to smaller players as they lack deep pockets to see them through the difficult times. A helping hand is indeed required for the survival of tourism industry in India.

“However, giving any type of direct financial aid may not be prudent. Ihe Indian economy is not in a healthy state and it will put an additional burden. More importantly, the current cash flow crunch in the tourism industry is an issue created due to the crisis but it is not the root cause. The situation has arisen due to the pandemic and because people have almost stopped travelling. Instead of giving financial grant, it is more important for the government and the industry stakeholders to take steps to bring in inbound tourists.

“Travel-dependent economies across the globe are coming up with innovative solutions, including activities for instilling confidence – like the SG Clean, Qatar Clean initiatives – as well as activities to attract tourists – like safe travel bubbles, pilot projects and offering incentives. Understanding and leveraging best practices from other countries/destination is crucial for all stakeholders in India to come up with the right strategies for the survival and revival of the  tourism industry. The government, on its part, must extend support to ease the immediate cash flow challenges through measures like interest free loans, provident fund relief and GST exemption.”

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