Hospitality's subdued reception

News Posted - 2010-03-02

The hospitality sector has welcomed the proposals in the Budget for 2010-11 to promote investments in new projects. However, the industry representatives are disappointed that some of the long-pending demands have not been addressed.

The Finance Minister announced that benefit of investment-linked deduction under the Income-Tax Act would extend to new hotels of two-star category and above anywhere in India to boost investment in the tourism sector.

Mr M. P. Purushothaman, Chairman, Empee Group, and President, Southern India Hotels and Restaurants Association, said that the support to new projects is a welcome move and will encourage new investments in the sector.

However, the hospitality sector is ‘completely disappointed' with the Centre not addressing the demand for infrastructure status, and rationalisation of taxes, which would have a long-term impact on the sector.

According to international property consultants, Knight Frank, the benefit will cover all new hotels of 2-star and above category which can avail themselves of an investment-linked deduction. The full capital expenditure incurred by the hotel can be reduced from taxable income. This will enhance the returns for developers of hotel projects.

Free way for monorails

The Budget provision according project import status to ‘Monorail projects for urban transport' at a concessional basic duty of 5 per cent has been welcomed by the industry.

Even more than the financial benefit, the recognition of monorail infrastructure as a solution to urban transport issues in Indian cities is a significant development.

Mr Kanesan Velupillai, President, Scomi International Pte Ltd of Malaysia, and Executive Committee Member, International Monorail Association, said that the announcement is a `good move that gives quick access to cities to monorail technology.'

Scomi International is a leading international player in providing monorail infrastructure and is implementing a monorail project in Mumbai. It has also plans to participate in bids called by other cities, including Bangalore and Pune, and is keen on providing the facility in Chennai when the opportunity arises, Mr Velupillai said.

The Budget announcement bodes good for urban residents in the light of the Government's keen interest in encouraging mass transport solutions. This recognition will help speed up project appraisal, paper work and encourage State governments to go for monorail projects.

Direct support to PPP partner

The Centre's support to low cost urban housing should be channelled directly to the PPP partner rather than through State governments or related agencies, according to Mr Navin M. Raheja, Managing Director, Raheja Developers Ltd.

In a press release reacting to the Budget provision, he has welcomed the focus on overall infrastructural development in the country including the rural sector. But the Finance Minister has not considered the real estate sector's major recommendations, such as granting infrastructure status to the industry and easing ECB for real estate. This would have helped the country to focus on meeting the housing shortage in the country as well as improving the overall GDP.

Further, the industry had recommended that Central support under Rajiv Awaas Yogna should be passed to the party who is executing the project under PPP instead of passing the benefits to the State government/agency which has also not been considered, he said.

Source: Hindu Business Line 28/2/10