Monday, August 8, 2022

Andhra Pradesh focuses on “world class hospitality sector” to boost tourism in the state

In an attempt to boost tourism, Andhra Pradesh government has decided to focus on facilitating the establishment of a world class hospitality sector in the state. The new tourism policy of the state has been formulated, keeping in view the state’s biggest Advantage of having a coastline (970-KM) along the Bay of Bengal. Chief minister Jagan Mohan Reddy went on to express his confidence on the fact that the policy will be one of the best in the country and will be a benchmark for all counterparts to emulate.

To ensure expeditious development of hospitality and tourism in the state, the government has proposed incentives that are some of the best in the industry and will attract both large-scale and small-scale investments. The following incentives shall be applicable to Tourism Projects:

A. Reimbursement of 100% of net SGST accrued to state for all new units for a period of 5 years from COD or up to realization of 100% fixed capital investment, whichever is earlier.

B. Fixed Cost Power Reimbursement to New Tourism Units at Rs. 2.00 per unit for a period of 5 years from COD for all new Tourism Projects.

C. Reimbursement of 100% of stamp duty.

D. 100% Waiver of Land Use Conversion charge.

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The state cabinet approved the most aggressive policy to boost Tourism and create employment opportunities in the state. This policy has been crafted, keeping in mind the ever-changing nature of tourism, the strengths and advantages of tourism in the state, the interests of large-scale and small-scale investors and all others stakeholders of tourism.

“Tourism provides income and employment to a large group of people, tourism alone contributes 7% to our state GDP, Keeping this in mind and directions of Chief Minister YS Jagan Mohan Reddy, we have created a dynamic, vibrant and a relevant tourism policy for the present scenario. The tourism policy will easily attract investments through various robust incentives provided by the state government in order to achieve our aim to develop the state of Andhra Pradesh.” said APTDC MD Pravin Kumar.

Speaking further Mr. Kumar said “tourism policy has classified the investments, Projects with investment more than Rs.400 Crores shall be considered as Mega Tourism Projects, Mega Tourism Projects / 5 Star and above projects shall have special provisions for tailor-made incentives and direct allotment of land and Mega Tourism Projects / 5 Star and above projects proposals shall be processed via the State Investment Promotion Committee and State Investment Promotion Board for accord of any incentives and land allotment to have a more transparent and quick approval.”

In view of making these projects financially viable, the AP government has formulated a land lease policy, which has been rationalized to attract more participation and facilitate investments across the state. The major pain points around eligibility criteria and lease rent enhancement have been particularly addressed. The key features are as follows:

A. Allotment under one of these options:
1. Lease hold basis.

2. Free hold basis as per the prevailing government policies.

3. Lease and revenue sharing basis.

B. The upset (reserve) price for bidding for lease hold model shall be 1% of the SRO value of the land parcel. This would result in the better marketing and healthy competition.

C. In case of lease and revenue sharing basis, the Annual Lease Rent (ALR) shall be fixed at 1% of the SRO value of the land and the Additional Development Premium (ADP) as quoted in absolute terms or percentage revenue share terms shall be the bidding parameter.

D. The Annual Lease Rent (ALR) and / or the Additional Development Premium (ADP), as quoted by the successful bidder, shall be enhanced by 5% in a block of every 3 years.

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