The fate of some of the multi-crore tourism projects signed amid much fanfare during the recent Partnership Summit 2012 organised by the Confederation of Indian Industry (CII) hangs in limbo, according to industry sources.
The government succeeded in attracting investments worth Rs. 1,700 crore for 12 projects, including five major ones, involving investment in excess of Rs. 100 crore during the summit. Malaxmi Indusparks Ltd, an eco tourism project near Vikarabad was proposed with Rs. 368 crore investment and Vaishnovi Infraventures and Resorts came up with a Rs. 355 crore project for setting up a mythological theme park at Tirupati while Varsha Hillfort Palace proposed setting up of Rs. 300 crore hotel project in the city.
Apprehensions
But apprehensions are being expressed on whether they would take off at all, pending grant of infrastructure status to tourism. Once the sector achieves infrastructure status, it will enable faster financial closure of the projects and enables developers to get smoother access to loans from financial institutions, banks in particular. The status would enable entrepreneurs venturing into the sector to avail of certain tax benefits on the lines of those extended to infrastructure projects.
Though several assurances have been given in the past, no concrete step has been initiated to grant the status. Tourism comprising hotel industry is an integral part and is treated on a par with real estate, constraining banks from giving loans beyond a certain limit, according to co-chairman of the CII southern region committee on tourism D.V. Manohar.
“It is difficult to secure loans for tourism and hotel projects owing to their treatment alongside real estate projects. Banks are unwilling to give loans to these projects,” he said. The CII was, therefore, pursuing the issue with the Central government as it is imperative to give fillip to tourism sector which, he said, is the highest employment generator.
The CII was pressing the Central government to make the leave travel concession given to employees as tax deductible. This will ensure that corporate houses will be more liberal in giving the incentive to their staff which will, in turn, give fillip to domestic tourism.
