Hospitality MSMEs, others request the govt for interest renunciation and more.
Almost a week after, the RBI (Reserve Bank of India) had declared separate liquidity support of Rs 15,000 crore with a period of up to 3 years for the contact-intensive sectors such as Hospitality MSMEs and ancillary services till March 31, 2022. To recommend “immediate fiscal measures to save it from imminent collapse,” the Federation of Hotel & Restaurant Associations of India (FHRAI) now has reached out to the Tourism Minister Prahlad Singh Patel and MSME Minister Nitin Gadkari.
According to Gurbaxish Singh Kohli, Vice President, FHRAI, the recovery of hotels would take a minimum of 3 years once the pandemic is over and travel is fully allowed. It would not be wise to think about recovery in the coming few months of lockdown relaxations to reach the levels of pre-covid. It would be difficult to compensate for the 1.5 years of closure, even if people start eating out and travel like before. It will take 1.5 years for the restaurants to recover if there are no restrictions and no social distancing norms.
FHRAI has requested a Hospitality MSMEs sector-specific stimulus package including a complete waiver of interest on loans, extension on a postponement of 3 years on the principal amount for all loans, and monthly basic salaries to employees of hotels and restaurants who lost their jobs amid the pandemic.
They also asked for expediting payments due towards the Hospitality MSMEs sector under Service Exports from India Scheme) and IT refund, waiver of secondary condition on average foreign exchange earnings Under Export Promotion Capital Goods Scheme and treating remittance from overseas tourists in INR as forex earning, bringing the tenor of ECLGS 1.0 and 2.0 at par with the tenor of ECLGS 3.0, and also, removing Rs 50 crore cap Under the special restructuring window and the condition requiring accounts classified as standard as of March 31, 2021.
According to Gurbaxish Singh Kohli, the support of RBI is welcome by them, but they still need more clarity on the support. They expect the government to pay the basic salary of employees and expect the government to help them in these tough times for Hospitality MSMEs is to give money to help the cash flows of the business.
In Financial Year 2020, the hotel and restaurant sector’s total revenue was Rs 1.82 lakh crore, of which, per FHRAI estimates, around 75 per cent was wiped off in Financial Year 2021. This is more than a Rs 1.30 lakh crore revenue hit for the Indian economy. The total loan outstanding to the hospitality industry was more than Rs 60,000 crore currently.
40% of hotels and restaurants in the country have shut down permanently due to financial losses, and since the first lockdown, around 20% haven’t opened fully, and the remaining 40% are still running in losses. In April this year, ECLGS 3.0 to cover enterprises in hospitality, travel & tourism,
leisure & sporting sectors was announced by the government, and it also extended the overall emergency credit scheme including the previous two versions by three months from March 31, 2021, till June 30, 2021, or until guarantees for the entire Rs 3 lakh crore amount are issued. The scheme was later extended till September 2021. The detailed guidelines from the government are awaited by the Hospitality MSMEs sectors.