Governement to extend infra status to Hospitality sector

The Government is considering extending the “infrastructure status” to all hotel projects with capital expenditure of Rs 250 crore and above. The move will provide the much sought after relief to the hospitality sector in India.

The principal benefit of this would be easier access to long-term funding as well as lower interest rates.

The tweaking of eligibility criteria marks a significant relaxation in the current rules that prescribe only three-star or higher category hotels located outside cities with population of more than 10 lakh to be reckoned as infrastructure projects for bank finance.

According to the Federation of Hotel and Restaurant Associations of India (FHRAI), 95 per cent of the hotels were outside the ambit of this provision.

he Reserve Bank of India had recently allowed Indian hospitality players (with a total project cost of Rs 250 crore or more) access to the ECB (external commercial borrowing) market.