The union government plans to classify investments in tourism as infrastructure spending to attract more money and businesses to the industry, announced Suman Billa, IAS, tourism additional secretary in the Government of India.
“The supply side of the tourism sector is not growing,” announced Billa in his keynote address at the session ‘Destination for sustainable tourism and responsible industry’ on the concluding day of the Invest Kerala Global Summit 2025.
Billa illustrated the hurdles India needs to jump to become a sought-after destination for international hurdles and mentioned the latest initiatives by the Centre to tackle them.
The tourism additional secretary highlighted that the current capital structure in the country was the reason for the lack of enthusiasm for new investments in the sector. For more investments, people need a compelling reason to put money into the industry, said Billa.
“Today, investment into hotels is considered as part of lending under the real estate category,” explained Billa. Such investments need to be classified as infrastructure development, he added.
Hotel investments being considered as part of real estate meant that loans provided for such activities carried a shorter tenure—eight to nine years, if you stretch it. Additionally, the interest rate was 2–3 per cent higher than those levied on infrastructure loans (which usually cap at 9–10 per cent).
“If we were to classify it as infrastructure, your repayment rate tenure goes to 15 years and you'll probably get an interest rate somewhere around 8–8.5 per cent, or even 7–8 per cent,” argued Billa.
However, in the latest Union Budget, provisions were made to identify 50 new tourist destinations across India. This is where the Centre looks to shift investment policies.
States have been asked to identify such destinations and make their pitches. “We will assess them on their ability to attract private-sector investments, create jobs, and engage the community, and essentially [determine if we would get the] bang for the buck,” he explained.
In these 50 destinations, where the state governments would bring in land as equity, “we will be providing the trunk infrastructure and whatever else that is required to make it a vital destination,” said the tourism additional secretary.
Therefore, the 50 new tourism destinations would automatically qualify for infrastructure status, irrespective of the quantum of investment, stated Billa. This meant that if you plan to build a hotel in this region, your project would get infrastructure status.
While this move to bring upcoming travel destinations under the infrastructure domain is expected to give a welcome fillip to the tourism sector, the tourism official said that they wanted to apply this to the entire country. However, limitations in the fiscal policy did not allow for it, Billa reasoned.
To lift the tourism sector further, the Centre assured stakeholders at the two-day summit that they were keen on ironing out issues related to the ease of doing business, across the country.
“We've become notoriously slow all across in many states in being able to get clearances… and the ease of doing business is really not there,” Billa said, citing about 56 clearances required for a person, on an average, to start a hotel in the country. And each of these 56 items needs 60 days to get clearance.
In investments, time is money and every delay impacts an investor’s internal rate of interest (IRR). This discourages investors, and the state is keen to address this problem, he stressed.
The Department of Promotion of Industry and Internal Trade (DPIIT) has been roped in to create a syllabus on the ease of doing business for the hospitality sector, like the one they are working on for the manufacturing sector. The 56 licenses need to be revised, and they need to be rationalised, said Billa. This has been promised in the next iteration of the DPIIT process, he assured.
However, the tourism official criticised the industry for not being quick enough to “come up with their wishlist” to help the policymakers iron out the issues. “Please do not hesitate to let us know,” said Billa, inviting tourism stakeholders to communicate key issues in the industry to the government. “Before the door is open, it is important for us to take into account all the issues and be able to make the best use of it,” added Billa.
Apart from this, the tourism official also urged states to think of themselves as entrepreneurs in the industry and push to increase the contribution of tourism from 5.04 per cent of India’s GDP to 10 per cent in the upcoming decade.
Kerala tourism is special: Tourism additional secretary Suman Billa IAS
At the summit, Billa lauded Kerala for its tourism infrastructure, calling it “way ahead of the rest of the country”. He complimented how tourism in the state has been isolated from the politics of Kerala, despite changing governments over the past 20 to 30 years.
“For international travellers who are coming in, we become a natural extension to the Middle East,” referring to the connectivity of airports that attract foreign traffic to the state.
“Kerala has an exceptionally skilled workforce and even in the hospitality industry, our people have done an exceptional job abroad and they are very well known. And I think the quality of service that Kerala offers is truly unmatched,” said the tourism official.
The Invest Kerala Global Summit 2025 from February 21 to February 22 took place at the Lulu International Convention Centre in Bolgatty, Kochi. The event, organised by the Kerala State Industrial Development Corporation (KSIDC) under the aegis of the Department of Industry and Commerce, Government of Kerala, aimed to attract both domestic and international investments across various sectors to the state, in a bid to lift the economic landscape of the region.
Apart from investors, the two-day summit saw stakeholders from various countries across a diverse range of industries and sectors. Special showcases from Vietnam, Malaysia, Germany, and Australia, were also presented at the venue.
