Tourism Policy

Andhra Pradesh Tourism Policy

GP News
25 September 2019 - 05:39 PM
Tourism Policy
1. Preamble
     Sunrise Andhra Pradesh Andhra Pradesh is the State of Opportunities.    The   State now targets      to    be   among  the  top   3 states   in  India      by 2022 and a developed stateby 2029. With the second longest coastline of 974 kilometersin the country, a rich historical     and            cultural heritage, ancient  and spiritual temples, serene   valleys    and hills; the new state of Andhra Pradesh with 13 districts holds vast tourist potential, hitherto .   Andhra Pradesh is strategically located on the south-eastern coast of India and is a natural gateway to East & South-East Asia. The state has a population of 4.93 crore (Census - 2011), accounting for 4% of country’s population.   The State provides an amalgamation of factors conducive to high growth and accelerated development, such as strong infrastructure, highly talented technical manpower, enterprising population and dynamic leadership. These offer immense opportunities for ushering in growth, development and resurgence of the State- the ‘Sunrise State’.  

        Tourism potential in Andhra Pradesh

Tourism in India has grown by leaps and bounds over the years, with each region of India contributing something to its splendor and exuberance. The ‘Incredible India’ campaign which showcases the best that India has to offer to tourists, now commands worldwide attention.   Andhra Pradesh has the distinction of being a leading tourism destination in India and is presently, the third most visited State in terms of domestic tourism. In 2013, 152.1 million domestic
tourists visited Andhra Pradesh, which was about 13.3% of the total domestic tourism market.   The State is a microcosm within itself – offering unmatched tourism potential to investors and tourists. It offers multitude of theme- based options to explore across its length and breadth. As part of its Tourism Mission strategy, the State offers nine major Tourism themes:  
1) Beach & Water-based
2) Eco-tourism
3) Buddhist
4) Religious
5) Heritage
6) Meetings,  Incentives,   Conferences,   and  Exhibitions           (MICE)& Infrastructure development
7) Recreation/Adventure
8) Spiritual/Wellness
9) Medical These nine major themes are further categorized into 42 sub-themes.  


     Mission-based approach to developing tourism

Government of Andhra Pradesh (GoAP) has envisaged a Mission- based approach to firmly set Andhra Pradesh on the path of sustainable development and growth. Seven missions have been identified to provide support in managing externalities and enhance    inter- departmental synergy for improving outcomes and reducing delays.
The Service Sector Mission would focus on enhancing job opportunities and providing further fillip to sectors such as tourism, construction, hospitality, financial services, education, IT and other allied activities. The Tourism sub-mission will work under the ambit of the Service Sector Mission.   The Tourism sub-mission will primarily focus on two key aspects:
a)  Theme-based development: It will focus on developing tourism projects under themes of beach & water-based, eco-tourism, Buddhist, religious, heritage, MICE & infrastructure development, recreation/adventure, spiritual/wellness and medical.
b)  Destination-based development through Hub & Spoke model: It will focus on developing tourism circuits on a hub & spoke model. The emphasis will be on developing five important tourism hubs (Visakhapatnam, Vijayawada, Tirupati, Rajahmundry-Kakinada and Srisailam-Nagarjunasagar) by 2020, and all other district headquarters as tourism hubs by 2029.

2. Tourism investment policy approach

     

Andhra Pradesh is on the threshold of evolving as the most preferred tourist destination in the country. The State offers myriad experiences to tourists, and multifarious opportunities to investors. The proactive Tourism Policy, coupled with abundant and world-class tourism opportunities available in the State, shall place the State on the tourism map of the world. The intrinsic potential of developing Tourism Infrastructure Projects and Services in Andhra Pradesh, when leveraged effectively and creatively, would make the State highly competitive and possibly, unmatched across other domestic and international destinations.   GoAP aims to create an enabling environment to encourage private investments. The State will provide potential private investors with excellent support infrastructure and access to a host of scenic locations, virgin beaches, backwaters, pristine forest areas and divine destinations for developing world-class Tourism Infrastructure Projects and Services.  

        Policy vision

To develop Andhra Pradesh as one of the most preferred tourist destinations through sustained investments, robust Tourism Infrastructure projects & services, and provide world-class diverse tourist experience  

        Policy objectives

Tourism shall be a major engine of economic growth in Andhra Pradesh, enabling socio-economic development of the state through enhanced revenues, employment generation and significantly contributing to the GDP of the state. The objectives of this policy are: a)  To position Andhra Pradesh as a globally recognized tourism destination b)  To become the most preferred choice for tourism investments in the country c)  To enable tourism sector to become a significant employment generator

    d)  To deliver world-class experiences by offering unique and diverse Tourism Infrastructure Projects and Services e)       To nurture and sustain the rich culture, heritage and environment of the State  

        Policy targets

In line with the objectives, the following targets have been set: a)       To be the most preferred State in India for domestic tourist arrivals, and among top 12 states for international tourist arrivals b)  To facilitate investments in the tourism sector to the tune of Rs 10,000 crore and contribute 7% to the State GDP by 2020 c)       To facilitate creation of 5 lakh additional jobs in the tourism sector  

        Policy validity

a)  The Policy will be valid from date of notification to March 31, 2020. b)  The Tourism Policy 2015-20 will supersede any GO/Circular issued earlier, which are in contravention to the provisions of this policy.

        Policy Instruments

Various  policy  instruments   have  been  detailed  in  this  policy document to facilitate achievement of the policy targets:

        Tourism Investment strategy

GoAP envisages that a majority of new projects in the Tourism sector will be driven by private sector investment. A relatively smaller proportion of projects will be through Public-Private  Partnerships (PPP) and direct government investment. a)  Private Sector Projects: To ensure that Tourism Infrastructure projects & services, facilities and standards are among the best in the world, the Government aims to primarily attract

private   sector
investmentsin   tourism   sector,
including

purchase/lease   of  landto   undertake   Tourism   Infrastructure

projects or Tourism Services b)  PPP Projects: PPPs can be established across all
the major

themes  and  sub-themes  identifed  under  the  Tourism  Mission strategy.This may include developing/  operating/ maintaining Tourism Infrastructure Projects or  offering Touris     Services on behalf of, or in partnership with, the State Government c)  Government  Projects:  GoAP,  through  a  designated  government agency,   will   undertake   select   tourism   projects          where government investment is required to drive tourist activities.  

To achieve the target
nvestment of Rs 10,000 crores by
2020, the

Tourism Department will develop a Shelf of Projects outlining the

    investment opportunities in the State. However, this list is indicative and not exhaustive. A Land Bank for Tourism Projects will also be created and maintained to ensure timely grounding of Tourism Infrastructure projects.  

          Uniform Tourism Zone across State

Tourist destinations are spread across the State. However, while the attractions are wide spread, tourist inflow is not. In order to balance tourist inflows and encourage maximum investment in the State, the Tourism Policy emphasizes minimum restrictions and maximum incentives to all investors. Accordingly, incentives in this Policy are proposed to be applied uniformly across the State, irrespective of the location of the Tourism Infrastructure project or Tourism Service.


3. Tourism Infrastructure projects

In line with the vision of the Tourism Policy, GoAP is committed to providing maximum incentives and concessions to encourage private investments for setting up and operating Tourism Infrastructure Projects in Andhra Pradesh as detailed below.  

        Eligible Tourism Infrastructure projects

a)  The State Government has identified the following Tourism Infrastructure Projects based on the priorities and alignment with the state’s aspirations: i.     Hotels (Three-Star or above category hotels as per guidelines of Ministry of Tourism, Government of India) ii.     Resorts, including beach resorts, jungle resorts, hill resorts etc. (Three-Star or above category hotels as per guidelines of Ministry of Tourism, Government of India) iii.     Heritage Hotels (Heritage Basic, Heritage Classic, Heritage Grand as per guidelines of Ministry of Tourism, Government of India) iv.     Amusement Parks v.     MICE Centers vi.     Golf Courses vii.     Botanical gardens viii.     Urban/Rural Haats ix.     Tourism &Hospitality Training Institutes x.     Wayside amenities xi.     Spiritual/Wellness Centers xii.     Museums b)  To be eligible for incentives, the project needs to be a new Tourism Infrastructure Project and compliant with the definitions and minimum requirements as prescribed in Section 8.2. c)  Tourism Department will periodically review the list of eligible Tourism Infrastructure Projects and propose inclusions / deletions / modifications, wherever necessary.

   

        Private    sector    investments    in  Tourism Infrastructure projects: Fiscal Incentives

 

         Complementary/Linkage Infrastructure Development Assistance

a)  Tourism Department will work with other concerned departments to ascertain, and link up, provision of major connecting infrastructure required to be established for the specific Tourism Infrastructure project b)  In addition, Tourism Department will provide incentives from the tourism budget for ‘Complementary/Linkage Infrastructure Development Assistance’ to support investors in providing last- mile connectivity for establishing comprehensive Tourism Infrastructure projects in the State. c)  The incentive will be targeted to provide support to investors in the form of establishing or, where already available, strengthening complementary / linkage infrastructure as per the specific requirement of the Tourism Infrastructure Project, but not exceeding the total complementary / linkage infrastructure cost. d)  Complementary / linkage infrastructure could be in the form of:
i.     Road access a.  From an existing road up to the project site b.  Where a road is not available, the Government will provide all necessary revenue record information for the investor to acquire Right of Way.
ii.     Power connectivity a.  From an existing transmission/distribution line till the project site b.  Switching station and transformer at the project site can be covered iii.     Water and Sewerage connection a.  Connection charges, road cutting charges, plumber costs b.  Connectivity to Sewage Pumping Station / Sewage Treatment Plant iv.     Transport infrastructure a.  Facilitate cab services from nearest airport / railway station / bus station for tourist activity

    b.  Bus stand at closest feasible point on the APSRTC route
v.     Communication network a. Facilitate access to network connectivity for mobile, internet connectivity
vi.     Health services a. Facilitate access to ambulance services
vii.     Security services a.  Project Site to be covered for safety & security under the jurisdiction of the nearest police station b.  Mobile police patrolling in the vicinity of the project site, as deemed feasible by the local police station e)  The responsibility for applying and procuring all required approvals for establishing/strengthening complementary/linkage infrastructure will rest with the private investor. The Tourism Department will render necessary assistance as and when required. f)  The total cost of the Tourism Infrastructure Project will be as per the Appraisal Report prepared by a Scheduled Commercial Bank and duly certified by a registered Chartered Accountant (CA).
The incentives towards Complementary / Linkage infrastructure will be applicable as per the provisions below:

Total Project Cost <Rs 50 crores
Up to a maximum of 5% of Total Project Cost, excluding the cost of land, or Rs 2 crore, whichever is less, but not exceeding the total complementary/ linkage infrastructure cost

Total Project Cost from Rs 50-100 crores

Up to a maximum of 7.5% of Total Project Cost, excluding the cost of land,   or Rs 5 crores, whichever is less, but not exceeding the total complementary/ linkage infrastructure cost

Total Project Cost from Rs 100 - 200 crores

Up to a maximum of 15% of Total Project Cost, excluding the cost of land, or Rs 10 crores, whichever is less, but not exceeding the total complementary/ linkage infrastructure cost

a)  In case of Mega Projects with significant tourist impact, GoAP may provide for higher fund allocation for provision of Complementary / Linkage infrastructure on case-to-case basis, but

    not exceeding the total complementary / linkage infrastructure cost.  

                   Land Conversion Charges

a)  Private investors will follow due approval process for conversion of land for Tourism Infrastructure projects as required by the Revenue Department or Urban Development Authority b)      If conversion of land is permitted by the relevant government authority, GoAP will waive the Non-Agriculture Land Assessment (NALA) tax or Land Use Conversion charge, as applicable.  

                   Registration and Stamp duty

a)  Incentives have been provisioned towards reimbursement of Registration and Stamp duty charges for the first time only and will be applicable for one of the following: a.  Land bought for Tourism Infrastructure projects or b.  Land taken on lease for Tourism Infrastructure projects or c.  Development Agreement charges for land taken on development agreement for Tourism Infrastructure projects b)  GoAP will provide 100% reimbursement on Registration and Stamp duty for all Tourism Infrastructure Projects c)  Additionally, if a private investor has registered land within the last two (2) years, and chooses to develop a Tourism Infrastructure project on such land, GoAP will reimburse 100%of the registration and stamp duty charges towards such investors d)  Reimbursement towards Registration and Stamp Duty charges will be subject to certification by the Registration Department and by the Commissionerate of Tourism after commencement of operations.  

                   VAT/CST/SGST

a)  VAT will be charged at 5% for all new Tourism Infrastructure projects from date of commencement of operations. GoAP will make necessary amendments to the relevant clause(s) in the Andhra Pradesh Value Added Tax Act 2005. The proposed VAT rate shall also be applicable for existing three star and above category hotels in the state. b)  The Tourism Unit is entitled to only collect VAT/CST/SGST at the rate prescribed and pay the same to the Government. c)  Incentive for VAT will be reviewed when GST is introduced.

   

                   Luxury Tax

a)  GoAP will provide 100% exemption of Luxury Tax for all new Tourism Infrastructure projects meeting the minimum requirements in Section 8.2 for a period of 3 years from date of commercial operations. During this period of exemption, Tourism Unit shall not collect any Luxury Tax. b)  After 3-years of commencing commercial operations of the Tourist Unit, Luxury tax shall be applicable as per existing laws c)  Incentive for Luxury Tax will be reviewed when GST is introduced.  

                   Entertainment Tax

a)  GoAP will provide 100% exemption of Entertainment Tax for first 3 years from date of commercial operations. During this period of exemption, Tourism Unit shall not collect any Entertainment Tax. b)  Incentive for Entertainment Tax will be reviewed when GST is introduced.  

                   Energy Tariffs

a)  All Tourism Infrastructure projects (new as well as existing) which avail High Tension (HT) connection, will be charged as per the rates provided in the “H.T. Category-III: Airports, Railway Station and Bus Stations” in the Andhra Pradesh Electricity Regulatory Commission (APERC) Tariffs. b)  The tariff shall be applicable after the Energy Department issues necessary orders, following due process.  

         Tourism     Infrastructure     projects            accorded ‘Industry’ status for specified purposes

a)  To encourage and accelerate rapid world-class tourism infrastructure development, GoAP shall accord industry status to new Tourism Infrastructure projects, compliant with the definitions in Section 8.2,    during the policy period for the following purposes
 i.     GoAP will work with Government of India for facilitating inclusion of Tourism Infrastructure projects to be eligible for availing loans at par with Industries
ii.    Special incentives like ‘accelerated depreciation’ which Government of India may provide to new industries in Andhra Pradesh as ‘special status’ will be made available for new Tourism Infrastructure projects

        PPP   investments   in   Tourism Infrastructure Projects: Fiscal Incentives

 

                   Land Conversion Charges

a) The incentives towards Land Conversion Charges will be applicable as per the provisions in Section 3.2.2  

                   Allotment of Land for PPP projects

a)  A dedicated land bank shall be created by the Tourism Department and regularly updated for undertaking Tourism Projects on PPP basis. b)  The policy of land allotment on long lease for eligible Tourism Infrastructure Projects will be continued. The lease tenure can be maximum up to 33 years at the first instance, unless specified otherwise for Mega Tourism Projects. Where the developer has complied with all the terms and conditions of the lease or license during the tenure, they shall be eligible for an automatic extension. The terms of the next lease will be determined by the policy prevailing at that point of time. However, the “Right of First Refusal” will be given to the existing developers/operators as defined in the RFPs & Agreements. c)  Competitive and transparent bidding will be adopted in projects initiated by GoAP. Notice inviting participation will be adequately publicized and the bid process shall be specified in the advertisement. d)  GoAP “Guidelines for Public Private Partnerships” will be applicable for Tourism Infrastructure projects. e)  For setting up of Tourism Infrastructure projects that are proposed on government land, lease rent of 2% of ‘Basic Market Value’ of the land from the Date of Possession, as per the valuation of the concerned sub-registrar office, will be charged to the developers with a 5% annual increase. f)  The investor will also be required to provide other securities and performance guarantees as specified in the specific tender document, besides making an upfront onetime payment covering all project development costs. g)  Normally, the bidding parameter will be Additional Development Premium (ADP), which shall be a percentage of annual gross

    revenue of the Tourism Infrastructure project or minimum annual assured amount, whichever is higher. h)  As per the Project Feasibility Report and specific project details, the percentage of annual gross revenue may be fixed, and the minimum annual assured amount may be used as the bidding parameter or the minimum annual assured amount may be fixed and the percentage of annual gross revenue may be used as the bidding parameter. i)  GoAP may also opt for models like Joint Venture, Special Purpose Vehicle, Equity, Annuity etc. for select Mega Tourism Infrastructure Projects. j)  In cases where a private sector investor submits an unsolicited or suo-motu proposal; not initiated by the Government, the “Swiss Challenge Approach” shall be followed, as enunciated in GoAP “Guidelines for Public Private Partnerships” and as per provisions of APIDE Act.      

                   Registration and Stamp duty

a) The incentive towards Registration and Stamp duty charges will be applicable as per the provisions in Section 3.2.3  

                   VAT/CST/SGST

a) The incentive towards VAT//CST/SGST will be applicable as per the provisions in Section 3.2.4  

                   Luxury Tax

a) The incentive towards Luxury Tax will be applicable as per the provisions in Section 3.2.5  

                   Entertainment Tax

a) The incentives towards Entertainment Tax will be applicable as per the provisions in Section 3.2.6  

                   Energy Tariffs

a) Incentives towards specified purposes will be as per the provisions in Section 3.2.7

   

          Tourism          Infrastructure     projects     accorded ‘Industry’ status for specified purposes

a) Incentives towards specified purposes will be as per the provisions in Section 3.2.8  

                   Complementary/Linkage Infrastructure Development

a) While preparing the Project Feasibility report of the PPP project, where the Tourism Department feels that the provision of Complementary/Linkage Infrastructure Development will help faster project implementation, Tourism Department will work with other concerned departments for establishment of required major Complementary/Linkage Infrastructure, as per the provisions in Section 3.2.1, and provide last-mile connectivity subject to the maximum limits prescribed in Section 3.2.1. These will be appropriately included in the bid document for the specific PPP project.  

        Government projects under Tourism Infrastructure: Fiscal Incentives

In cases where select Tourism Infrastructureprojects are undertaken by GoAP, through a designated government agency, the incentives and support to be provided would be based on internal government decisions on a case-to-case basis.  

        Mega Tourism Infrastructure projects

a)  All projects with investment above Rs. 200 crores, irrespective of the location in the State, will be treated as Mega tourism projects. Additional incentives and concessions on a case-to-case basis may be granted with approval of the STPB/STPC or the SEDB as the case may be. b)  For Mega Tourism projects implemented on PPP mode, formation of Special Purpose Vehicles (SPV) may be explored  

        Additional incentives for Tourism Infrastructure projects

                   Performance based incentives

a)   GoAP  will  institutionalize  Tourism  awards  for  rewarding      best performing Tourism Infrastructure Projects in the State based on

    various parameters. Guidelines for the same will be published separately.  

                   Marketing incentives

a)  Government of Andhra Pradesh will facilitate a central booking engine through the Andhra Pradesh tourism website b)  Support will be provided by the State Government for leading tourism units under Tourism Infrastructure Projects to participate in Tourism events in India and abroad. Guidelines for the same will be published separately. c)  GoAP will advertise Tourism Infrastructure Projects in brochures and other print material of Andhra Pradesh Tourism.    

        Special conditions for Tourism Infrastructure projects

a)  Incentives provisioned in this Policy shall not be applicable for any existing Tourism Infrastructure project that is being expanded, modified or upgraded. b)  For incentives proposed in this policy to be applicable for a new Tourism Infrastructure project, commercial operations must start before March 31, 2020. c)  While extending incentives, subsidies and concessions, it shall be a general condition that the total financial commitment from GoAP, including incentives mentioned in 3.2.1, 3.2.2 and 3.2.3 for private sector investments and 3.3.1, 3.3.3 and 3.3.9 for PPP projects, shall not exceed 20% of the Total Project Cost of the Tourism Infrastructure Project, excluding the cost of land. This condition will also be applicable for Mega Tourism Infrastructure Projects

4.Tourism Services

Andhra Pradesh provides an incredible amount of opportunities for offering world-class tourism services across a wide range of themes, and GoAP is keen to usher investments from quality tourism service operators.  

        Eligible Tourism Services

a)  The State Government has identified the following Tourism Services based on the priorities and alignment with the State’s aspirations:
i.     Beachside shacks
ii.     Water sports (sailing, windsurfing, jet skiing, scuba diving, river rafting, kayaking, snorkeling, paddling etc.)
iii.     Water ride/sailing facilities (sail boats, houseboats, glass bottom boats, amphibious, hovercraft, seaplanes etc.)
iv.     Sea/ River/Canal Cruises
v.     Adventure services (Parasailing, paragliding, camping/trekking/hiking services, cycling trails, nature trails etc.)
vi.     Ropeways
vii.     Heli-tourism
viii.     Farm Tourism Services
ix.     Rural Tourism Services
x.     Heritage walks
xi.     Caravan tourism
xii.     Inbound travel &tour operators
xiii.     Cab services / car hire services catering to tourists
xiv.     Food courts/stalls at tourist destinations
xv.     Rest rooms at tourist destinations
xvi.     Cloak rooms at tourist destinations
xvii.     Parking facilities at tourist destinations
xviii.     Souvenir shops at tourist destinations
xix.     Light & sound/laser shows at tourist destinations
xx.     Audio-video guide services at tourist destinations b)  The Government encourages beachside services such as tonga rides, animal rides, children play area, beach volleyball etc.

    However, these services will be not be eligible for incentives. c)  The list of Tourism Services is only indicative and not exhaustive. Tourism Department will periodically review the list of Tourism Services and shall propose inclusions/ deletions/ modifications as per the market demand and suggestions of the Industry. d)  GoAP will bring out special policies/guidelines with clear procedures for registration, classification, certification and operation of Tourism Services in the State. e)  Tourism Services need to be compliant with the definitions and minimum requirements as prescribed in Section 8.2.  

     Incentives for setup and operations of Tourism Services

Various provisions for incentives and concessions to encourage private investments for setting up and operating Tourism Services in Andhra Pradesh are made as detailed below.  

                   Investment subsidy

a)  GoAP will provide Investment Subsidy to investors for setting up and operating the following Tourism Services in Andhra Pradesh.

Tourism Services:
   Water sports ·        Water ride/sailing facilities ·        Sea/River cruises ·        Ropeways ·        Heli-tourism ·        Caravan tourism ·        Audio-video guide services at tourist destinations

Total Project Cost<Rs 1 crore:  15% of value of Total Project Cost, excluding the cost of land .

Total Project Cost from Rs 1- 10 crore :15% of value of Total Project Cost, excluding the cost of land, or Rs1.25 crore, whichever is less

Total Project Cost from Rs 10 - 20 crore: 15% of value of Total Project Cost, excluding the cost of land, or Rs 2 crore, whichever is less


  b) The Total Project Cost will be evaluated by a Government registered Valuer. The Tourism Service will need to be approved by the relevant Regulatory Authority for the particular Tourism Service, and will only then be eligible for receiving Investment subsidy b)  Investment subsidy will be reimbursed in slabs of i.     20% (at time of commissioning for commercial operations) ii.     30% (end of first year of commercial operations) iii.     50% (end of second year of commercial operations) c)  GoAP will support building of Complementary/Linkage Infrastructure which becomes essential for the provision of the Tourism Service by way of construction of Jetties (facilitating water ride/sailing facilities; sea/river cruises); parking spaces (caravan services); helipads (heli-tourism) etc. based on the demand from the market and proposals received from investors. This support will be up to 20% of the cost of building of Complementary/Linkage infrastructure or Rs25 lakhs, whichever is less. d)  GoAP may provide any other support on case-by-case basis after due examination for investments greater than Rs 20 crores in Tourism Services. However, the support will not exceed 20% of the total project cost, excluding the cost of land.  

                   Marketing support for Tourism Services

a) GoAP will provide support for Tourism Services at tourist destinations through marketing of services as part of the State’s tourism megabrand campaigns and facilitate tie-ups with outbound tour operators in other states / countries.

        Special conditions for Tourism Services

a)  Incentives provisioned in this Policy shall not be applicable for any existing Tourism Service that is being expanded, modified or upgraded.

    b)  For incentives proposed in this policy to be applicable for a new Tourism Service, commercial operations must start before March 31, 2020. c)  While extending incentives, subsidies and concessions, it shall be a general condition that the total financial commitment from GoAP, including incentives mentioned in 4.2.1 (a) and 4.2.1 (d) shall not exceed 20% of the Total Project Cost of the Tourism Service, excluding the cost of land, if any.