Subsidy to Hotel Industries

Ministry of Tourism (formerly Department of Tourism under the Ministry of Civil Aviation and Tourism), GOI introduced an interest subsidy scheme for setting up hotel projects in1,2,3-star category and heritage hotels with an objective to develop tourism in India so as to exploit the potential of earning precious foreign exchange. As per the original scheme the interest subsidy was @1% upto an aggregate loan assistance of Rs. 7.50 million for each hotel project subject to the company being regular in meeting its commitment to the lender. Subsequently, there had been certain changes in the eligibility for interest subsidy from time to time.
The broad guidelines for the same are as under:-

i. The interest subsidy was available for a new project as well as for the expansion of existing hotel; expansion project may be defined as one, which envisages increase in room capacity by at least 25% of existing room capacity.
ii. The project should have prior approval of DOT.
iii. The interest subsidy for one to three star category hotel stands increased from 1% to 3% p.a. on the entire loan assistance.
iv. The interest subsidy would be available @5% for approved heritage hotel projects located outside the four metropolitan cities viz. Delhi, Kolkata, Chennai and Mumbai.
v. The interest subsidy was also available @5% to one to three-star category hotels located on specified circuits / destinations.
vi. To increase the growth in heritage hotels, DOT in May 1993 introduced the capital subsidy scheme @10% of cost of project with a cap of Rs. 0.50 million.

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