The Indian government is offering incentives to development companies for the construction of new hotels in the country.
The Reserve Bank of India (RBI) has de-linked its credit terms for hotels from those applied to commercial real estate projects, enabling developers to avail credit at reduced interest rates.
The government is offering tax incentives to new hotels rated at two stars and above, in an effort to drive the growth of accommodation supply in the country, and two-, three- and four-star hotels operating in UNESCO World Heritage site areas (except those in Mumbai and Delhi) will get a five-year tax break.
The country’s Ministry of Finance has also extended the incentives to hotel developments rated three stars or higher located in smaller cities, and hotels with a project cost of more than INR2 billion (US$29.9 million).
And overseas companies will also be allowed to do business in India, with the government allowing Foreign Direct Investments (FDI) of up to 100%.
As per a report from the Planning Commission, India requires 190,108 more hotel rooms in 2016 compared to 2010.