Tourism Takes Flight In Budget! What does it mean for Startups?

The Union Budget 2023-24 has given a noteworthy boost to the tourism industry, especially to the local tourism. From 50 tourist destinations that will see integrated development to hike in tax on overseas trips, the tourism sector has been given special attention in the budget!

How will the government's push towards integrated development of 50 tourist destinations impact the domestic tourism sector? What does the hike in tax collected at source for overseas trips mean for international travelers? Has the tourism industry been given the support it desperately needs post the pandemic? 

Let’s find out!

The measures announced in the Budget are expected to have a positive impact on startups in rural areas, particularly those related to the tourism industry. By creating business opportunities and promoting local handicrafts, the government is expected to provide a much-needed boost to the local economy and support the growth of startups operating in these areas.

Integrated Development of 50 Tourist Destinations

The government has proposed integrated development of 50 tourist destinations to give a significant boost to the domestic tourism sector, which has been badly affected by the pandemic. With an outlay of Rs 2,400 crore allocated for the sector in the next financial year, the government aims to develop these destinations, both physically and virtually, with active participation from states and public-private partnerships. The selected destinations will be developed as complete packages, focusing on both domestic and foreign tourists, and amenities will be developed in border villages as well.

Hike in Tax Collected at Source for Overseas Trips

International trips are set to become more expensive, as the government has hiked the rate of tax collected at source (TCS) to 20% from 5%. This tax will be collected and paid on remittances made for foreign tours, hotel bookings, or car rentals overseas, even if purchased individually. Directly purchased international air tickets by travellers will not attract TCS.

Encouragement for States to Set up Unity Mall

Sitharaman has also encouraged states to set up a Unity Mall to promote and sell geographical indications and other handicraft products.

The promotion of local handicrafts and souvenirs through Unity Malls is expected to attract more tourists to the state, as it will provide them with an opportunity to purchase unique, locally made products. This will also help to preserve the country's rich cultural heritage and provide a platform for local artists to showcase their talent and make a living from their work.

Moreover, the sales from these Unity Malls can contribute to the state's economy, as the money generated from the sales will stay within the state and support local businesses. This initiative is expected to have a positive impact on the overall economy and provide a much-needed boost to the local communities.

What does this boost to tourism mean for startups?

The measures announced in the Union Budget 2023-24 are expected to have a positive impact on startups in rural areas, particularly those related to the tourism industry. The integrated development of 50 destinations and the promotion of local handicrafts through Unity Malls is expected to create business opportunities for startups operating in these areas. By providing a platform to showcase and sell their products, startups will be able to reach a wider audience and increase their revenue.

Additionally, the allocation of Rs 2,400 crore for the tourism sector is expected to provide a boost to startups operating in this space, as it will result in an increase in demand for tourism-related services and products. The government's focus on developing the tourism sector is also expected to create employment opportunities for individuals in rural areas, which will, in turn, help to revive the local economy.

The allocation of funds and focus on domestic tourism development is a step in the right direction and is expected to bring the industry back on its feet. According to the World Travel and Tourism Council, the travel and tourism sector in India is expected to generate 9.3% of the country's total employment by 2023 and contribute to 6.8% of the country's GDP. The government's push towards integrated development of tourist destinations and promotion of domestic tourism is expected to create employment opportunities and boost economic growth in the sector.