The Federation of Hotel & Restaurant Associations of India (FHRAI) has taken decisive legal action to address adverse provisions impacting hotel members within the hospitality sector, originating from the Directorate General of Foreign Trade’s (DGFT) directives. These conditions have significantly challenged the industry, particularly amidst economic adversities compounded by events like the global recession, terrorist incidents, and the COVID-19 pandemic.
FHRAI said it advocated for relief for the hospitality sector while consistently engaging with the Ministry of Tourism and DGFT since 2017. Despite persistent efforts, the sector is yet to receive the necessary relaxations, prompting FHRAI to seek legal recourse.
In 2007-08, DGFT introduced an additional condition under the Export Promotion Capital Goods (EPCG) Scheme, mandating stringent foreign exchange earning criteria, including maintaining a 3-year average past performance. This condition has led to substantial declines in foreign contribution, impacting the hospitality industry’s ability to comply with the secondary condition of maintaining performance averages.
Since February 2017, the hospitality industry has highlighted this issue to DGFT, coinciding with the expiration of licenses post the introduction of the secondary condition. Despite continuous appeals to the Government for relief as per the provisions in the Handbook of Procedures 2015-20, the sector’s challenges persist.
The rebound in the tourism sector has been particularly notable, with global travel and tourism revenues projected to increase by 8.3 per cent in 2024, reaching almost USD 930 billion. This surge marks the highest revenue figure ever recorded in the industry, reflecting a strong resurgence following the pandemic-induced downturn.
Pradeep Shetty, President of FHRAI, stressed the urgency of relief, stating, “FHRAI has decided to file a writ petition in the Delhi High Court in response to numerous appeals from our members. The hospitality sector deserves fair treatment under the Foreign Trade Policy, given recent economic challenges. Our goal is to protect our members from undue prosecution and ensure equitable treatment compared to other export-oriented industries.”FHRAI’s actions come amidst significant challenges faced by the hospitality sector, as evidenced by a sample survey conducted in 2021 revealing a notable decline in export earnings among 35 hotels. The introduction of an amnesty scheme by DGFT in 2023 aimed at resolving default in Export Obligations also underscores the sector’s struggle, especially with the scheme concluding by 31st March 2024.
FHRAI also highlighted the disproportionate impact on the hospitality sector, urging for relaxation or re-fixation of annual averages from past years, akin to provisions extended to other export sectors under the Handbook of Procedures 2015-2020.
