Key Policy Issues for the Indian Hospitality Industry: Part 3

This article is the last of a three-part series discussing some key policy reforms which will ease and incentivise hotel development in India. In parts one and two, we discussed reforms required in Building Bye-Laws, Construction Norms, Industry Status and Infrastructure Status. This series aims to draw attention to some critical issues discussed in Policy Reforms: A Roadmap to Boost the Indian Tourism Industry. Today’s edition sheds light on a cumbersome requirement for hotels: Licencing.

Hotel Licences

Navigating through the required hotel licences in India can be a complex, tiresome and lengthy process for an owner or developer. A laundry list of licences and approvals are required at different stages across the lifecycle of a hotel development. Depending on the type, some of these licences may need regular renewals while others may require one-time approvals. Moreover, across states the process, approvals and licences vary. In some states the number of licences and approvals can go up to 100. At present, some of the documents required for processing the various licences are ambiguous, repetitive and unnecessary. These issues have led to major delays in the opening of hotels, further adding to the capital expenditure required.

As seen in the figure above, hotel development and operations in India requires three times the number of licences required by other countries. India needs a consolidation of licences and a standardised system that ensures the number and type of documents required for these licences is consistent across all states. We recommend that timelines for licences and approvals be listed clearly. The Government of India has created a National Single Window System (NSWS) which allows individuals to apply for various licences across different sectors. However, as seen in the figure below, hotel related licenses, for example liquor licenses, are yet to be a part of the system.

Liquor Licences

In addition to inconsistency and delayed timelines, there are two major issues related to liquor licences. Firstly, there is a huge disparity in the fees charged for these licences across states – a liquor licence can cost ₹10,000 in Goa whereas this fee can go up to ₹56,00,000 in Telangana. Secondly, the licence is issued to an employee – typically the General Manager or the Financial Controller – and this employee exiting the property, leads to a lengthy re-issue process.

Singapore has a straightforward application process and an informative reference document which provides clarity on the types of liquor licence. Moreover, the fees range from SGD 110 to 880 based on the type of liquor as well as the validity. We recommend that India’s Excise Department should set a clear timeframe for the issuance of all licences, both new and renewed licences, along with a streamlined process. Furthermore, these licences should be issued in the name of the establishment.

Looking Forward

While this brings us to an end of this series, there are additional critical issues discussed in Policy Reforms to Boost India’s Tourism Industry- Hotelivate Insights. As Hotelivate we continue to shed light on such issues and promote discourse in the hope of improving the industry. It is crucial for all stakeholders to align and impress upon regulators the reforms that are required to create an effective policy framework and conducive business environment for the hospitality industry.