REQUESTS FOR INFRASTRUCTURE STATUS, CONTINUATION OF EPCGS & ENHANCEMENT OF LOAN REPAYMENT PERIOD UNDER ECLGS                                                                        

Earlier today, delegates of India’s apex hospitality Association - Federation of Hotel & Restaurant Associations of India (FHRAI) attended a pre-budget meeting chaired by the Hon’ble Finance Minister – Smt. Nirmala Sitharaman with the Trade and Service Sector representatives. FHRAI put forth to the Hon’ble Minister specific requests with special emphasis on granting infrastructure status to the hospitality industry. Among other critical points, the apex Association has requested the FM for continuation of the Export Promotion Capital Goods Scheme (EPCGS) for another 10 years and extension on the repayment period under the Emergency Credit Line Guarantee Scheme (ECLGS) of 10 years or based on the loan repayment period of the principal loan. FHRAI will submit a detailed representation to the FM shortly.

Currently, hotels built with an investment of Rs.200 Cr or more have been accorded infrastructure status under the RBI Infrastructure lending norm criteria. The Association has requested that this threshold be brought down to Rs.10. Cr to give fillip to budget segment hotels. This will enable hotels to avail term loans at lower rates of interest and also benefit from longer repayment period. It has also requested for hospitality to be classified an industry that’s applicable across the country and create a corpus which compensates States for any notional loss.

The Association has also requested for the Emergency Credit Line Guarantee Scheme (ECLGS) loan term for the hospitality sector to be extended for maximum period under the current provisions. The Association has requested that the repayment period be either enhanced to 10 years or as per the loan repayment period of the principal loan, whichever is longer.

In view of the volatile economic environment brought upon the industry due to the pandemic, FHRAI has requested the Government to continue the current benefits for the hospitality industry under the EPCG Scheme for another 10 years. It has also asked for being granted export status to hospitality to accelerate the growth of the sector. Among other recommendations, which will also be submitted to the FM, FHRAI has requested for: -

1. Waiver of secondary condition with regard to average Foreign Exchange Earnings under EPCG scheme retrospectively from FY 2007-08 onwards

2. Placing tourism and hospitality on the concurrent list of the Constitution

3. Uniform GST @12 per cent across all hotel categories and room tariffs

4. Relaxations in Section 115JB – Minimum Alternate Tax (MAT) thereby allowing a waiver on it for two years from April 2023 to March 2025

5. Extension on investment linked benefits under Section 35 AD for brownfield hospitality projects also

6. Modification in the Leave Travel Allowance (LTA) rules to include amount spent on hotel stays to be considered as LTA expense

7. Treating payments made by foreigners in INR in hotels as foreign exchange earned for the purpose of EPCG scheme, and 8. To be allowed to set-off business losses for up to 12 years under Section 72