Hotels see no need to police price cuts

MINI EXIM POLICY 2004- IMPACT

Welcoming the government decision to extend the benefits of duty-free imports to heritage as well as one- and two-star hotels, and stand-alone restaurants in the new Exim Policy, the Federation of Hotels and Restaurants Association of India (FHRAI) said the precondition that it was subject to an undertaking that the benefits would be passed on to consumers was unreasonable.

"The government has provided duty sops to several other sectors, but it doesn't interfere with the pricing of the end products. So why single out the tourism sector? It is very difficult for the government to constantly monitor whether the benefits are being passed on to the consumers or not," said Shyam Suri, secretary-general of the FHRAI.

The decision to allow duty-free imports for restaurants was prompted by a long-standing demand for the same.

"In a highly capital intensive business, like hotels and restaurants, steep duties on foreign liquor and other items make life difficult for small operators. Today's decision is a very welcome step," said Subhash Goyal, chairman of Stic Travels.

The government has also brought in capital goods "" including office and professional equipment "" for the tourism sector under the duty-free imports category. However, agricultural and dairy products have been excluded from the list.

"Kitchen equipment and computer hardware will become cheaper for us. It will benefit the smaller players who are planing expansion," said Suri.

Goyal feels that the decision to pass the benefits to the consumers was aimed at promoting the tourism sector in the long-run and the industry should not look for instant results.

"The government incorporated a similar clause for the airline companies when the duty on aviation turbine fuel was relaxed," Goyal added.