Building a Better India – Part 9: Boosting hospitality and tourism

We urgently need to curtail and reduce all formalities, consents and permissions by repealing or  changing existing relevant laws on hotels, restaurants, bars and pubs, mostly framed by state governments

Service based establishments like hotels, restaurants, resorts and bars are of immense importance for the Indian economy and many micro economies around the country, in terms of providing facilities to Indian and foreign tourists and guests, contributions to government revenues, employment and earnings of foreign exchange. But setting up a hotel or a one of these establishments is among the most cumbersome, time consuming and expensive procedures, in terms of number of consents, licences and registrations required and number of taxes involved :-

 Licences, consents and registrations required

Blue print of the site plan and Sanction of building plan.
Permission from local police and fire department.
NOC from chief medical officer and approval of water lines and sewerage and Clearance from director of industrial safety and health.
Consent for water and air pollution and approval of garbage
disposal and sewerage.
Licence for power and electrical installations.
Trade licence and Registration with shops & establishment dept.
Licence to play music in rooms, common areas and on special   events.
Bar licence from state excise authorities.
Restricted money changers licence
Sanction of LPG and furnace and Calibration of weights and      Measurements
Food handler’s licence and nomination under food adulteration act.
Permission to open parlours and saloons within hotel.
Obtaining Hotel star classification from central government
License for installing and operating lifts.
Tax registrations and formalities:

Registration with state excise authorities with numerous formalities, records and filing of returns for storing and serving liquor.
Registration for state VAT, Service tax and Luxury tax
PAN and TAN number
Registration with PF. Dept. And Registration with ESI
Trade licence.

NOTE: almost every consent, permission, registration and licence has official and 'unofficial' fees.

Ironically no rule or restrictions or any other formality applies to food cooked and sold on pavements and streets, other than some pay-offs to local officials.

In search of solutions:

The ministry of tourism of every state government  should set up a separate department to provide a single window facility to the entrepreneurs for granting one single consolidated licence for opening a new hotel, restaurant, bar or pub by coordinating with various agencies after taking all necessary information /clarifications / supporting documents from the applicant; and by charging a single lump sum licence fees and such licence should replace all existing licences, consents and permissions. This should be renewable once in three years upon payment of renewal fees, review and inspection. The single window should also have the responsibility of registration of the applicant with various tax departments under one roof.

There is an urgent need to curtail and reduce the formalities, consents and permissions by repealing/ changing the existing relevant laws on hotels, restaurants, bars and Pubs mostly framed by state governments.

You may also want to read...

Building a Better India-Part1: How to create a smaller and smarter government
Building a Better India-Part2: Transforming political landscape
Building a Better India – Part 3: Bringing systemic changes in constitutional bodies
Building a Better India – Part 4: Identifying tax issues
Building a Better India – Part 5: Bringing tax reforms

Building a Better India – Part 6: Fast track clearances

Building a Better India – Part 7: Managing India's Deficit

Building a Better India – Part 8: Boosting Coal Production

(Kolkata-based Dalbir Chhibbar practised as a CA till 1990 and later started his own buinsess)



Shreekanth Prabhu

3 years ago

This may require work-flow automation where prospective licensee comes to know of status of all approvals. Otherwise he will simply be waiting or again ending up following up. Time-bound and transparent approval process is needed. Since all these approvals are important. They should be processed without unofficial fees.

SAT upholds SEBI's Rs7 lakh penalty order against IndiaNivesh

SAT said, after taking into consideration all mitigating factors, SEBI has imposed a penalty of Rs7 lakh on IndiaNivesh Capital as against penalty imposable at Rs1 crore, which can't be said to be arbitrary or unreasonably excessive

The Securities Appellate Tribunal (SAT) dismissed plea of IndiaNivesh Capitals against an order issued by market regulator Securities and Exchange Board of India (SEBI) slapping a fine of Rs7 lakh on the company for failing to make shareholding disclosures within the stipulated time.


The SEBI in March had imposed a penalty on the company for the delay of more than 16 months in making disclosures.


IndiaNivesh Capitals (erstwhile Jupiter Enterprises Ltd) approached SAT saying that the decision of the market regulator was 'arbitrary and unreasonably excessive'.


In an order, SAT said that "in the present case, penalty imposable upon the appellant for failure to make disclosures (under SEBI's norm)...would come to more than Rs1 crore for the delay of 16 months and 6 days."


However, SEBI after taking into consideration all mitigating factors has imposed penalty of Rs7 lakh as against penalty imposable at Rs1 crore, which can't be said to be arbitrary or unreasonably excessive, SAT noted.


It said the company having failed to comply with the disclosure requirements can't escape the penalty for the violations committed by it.


SAT said it sees no reason to interfere with the order passed by SEBI and dismissed the company's appeal.


India to pay Iran $1.65 billion for oil imports via UAE

Indian refiners will make payment in rupee to UCO Bank, which will be transferred to RBI for onward credit to the central bank of UAE. The UAE central bank will then make payments in dirhams to Iran

India will pay Iran $1.65 billion through the United Arab Emirates (UAE) central bank to clear over 40% of the backlog payments for oil imports.


Since February 2013 when the US blocked payment channels, India has been paying 45% of its oil bill to Iran in rupees through a UCO Bank branch in Kolkata. For the rest, it has been waiting for a payment channel.


As much as $4 billion has been accumulated in past dues. A payment mechanism is now in place under which $1.65 billion in three equal instalments of $550 million each will be transferred to Iran via the UAE central bank, senior government and industry officials said.


Under the two-stage payment mechanism worked out, Indian refiners, in proportion to their dues, will make rupee payment to the UCO Bank. This money will be transferred to the Reserve Bank of India (RBI) for onward credit to the central bank of UAE.


The UAE central bank will then make payments in dirhams to Iran.


Officials said the first two instalments may be paid this month and the third $550 million tranche by 20th July deadline set by the US and five other world powers for Iran to receive part of its past payments from its oil buyers.


The two instalments this month will be made up of $238 million by Mangalore Refinery and Petrochemicals Ltd, $232 million from Essar Oil, $57 million by Indian Oil Corp (IOC), $8 million by Hindustan Petroleum Corp Ltd (HPCL) and $15 million by HPCL Mittal Energy (HMEL).


Iran is seeking interest on pending dues. However, the Indian government as well as the RBI have flatly refused to pay interest saying they have always been ready to make timely payments but the problem of mode and channel were due to Iran.


Under an interim nuclear deal with US and five other world powers, Iran on 24 November 2013, won access to $4.2 billion in past oil revenues from a number of countries including India.


The funds, which previously could not be transferred as western powers clamped down on payment routes, were to be paid in eight instalments of $550 million each beginning with the first transfer by Japan on 1st February.


South Korea was to make two payments in March totalling $1.1 billion and India was to make its first payment on 17th May, but in absence of payment modalities it was delayed.


There is now a broad understanding on the payment route and subject to agreement with Iran the first tranche may go out as early as next week, officials said.


India had been, since July 2011, paying in euros to clear 55% of its purchases of Iranian oil through Ankara-based Halkbank. The remaining 45% due amount was remitted in rupees through UCO Bank.


Payments in euro through Turkey ceased from 6 February 2013 but the rupee payments for 45% of the purchases continued through UCO Bank.



sanjeev naik

3 years ago

now US will be after the central back of UAE... US want the crude rate to go up so that they can export their oil and thats why they are funding ISIS in Iraq..

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