HAI applied for the line of credit to be used for business purposes, including loan repayment and interest payment; complete or partial waiver of statutory expenses such as property tax, rental agreements, license fees, consumption tax, etc.

Simple business transaction for MSMEs: Affected by the pandemic, a variety of sectors and industries have made the government survive Covid. While the government recently extended the scope of the Emergency Credit Line Guarantee Scheme (ECLGS) to the hospitality, travel and tourism sectors, the hotel industry organization has now called on Finance Minister Nirmala Sitharaman to “adjust”. In their recent submissions to Sitharaman, the Hotel Association of India (HAI) said that ECLGS needs to take into account the fact that because of their high capital intensity, hotels have a high percentage of fixed operating costs that are no longer sustainable due to zero or negligible income are . In addition, HAI stressed that hotel restoration will also take a long time as borders will be reopened with extreme caution and traveler confidence will return over an extended period of time.

“The inclusion of government finance companies, asset reconstruction companies (ARCs) and debt funds, the extension of the moratorium, the limitation of the interest rate to 8 percent and the extension of the grace period are some of the proposed adjustments,” the association said. which represents the members properties including 2-star and below to 5-star, said in a statement. HAI added that while ECLGS 3.0 provides liquidity to pay interest obligations, it does not help businesses survive. Hence, interest subsidies and a longer payback period can provide both liquidity and relief.

The government announced in March the launch of ECLGS 3.0 to cover hospitality, travel and tourism, leisure and sports businesses, and the entire emergency loan program, including the two previous versions, by three months from March 31, 2021 to June 30 extended. 2021 or until guarantees are issued for the full Rs 3 lakh crore amount. While this would definitely help the MSMEs, the overall impact would be negligible, but the leading association for the travel and tourism sector in India: The Federation of Indian Tourism and Hospitality Associations (FAITH) had informed Financial Express Online.

Also read: MSME Lending: NBFC lenders see significant drop in lending for at least three months amid Covid 2.0

“We think something is better than nothing because 70 percent of companies in the industry are small businesses. Domestic tourism has only recovered by 30 to 40 percent, while domestic traffic has revived 80 percent of pre-Covid levels. However, international tourism has come to a standstill. I think the overall impact of ECLGS on MSMEs in the travel and tourism sector will be negligible, ”Subhash Goyal, Secretary General of FAITH and Chairman of ASSOCHAM’s National Tourism and Hospitality Council told Financial Express Online. By February 28, 2021, banks and other lenders under the ECLGS program had sanctioned 82 percent or 2.46 billion rupees of 3 billion rupees under the ECLGS program, MSME Minister Nitin Gadkari had in a written reply a question said at Rajya Sabha in March.

Among other things, HAI urged hotels to use the line of credit for any business purpose, including repaying loans and interest payments, waiving all or part of statutory expenses such as property tax, lease rent, license fee, excise tax, and introducing plan or policy for hotels to renegotiate Rental agreements / license fees in such a way that the lessor or licensor can generate additional income for the remaining term, while hotels can make up for losses. Recently, retailers, distributors and other industry groups had reached out to the government for similar benefits in fighting Covid.

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