Realising the importance of tourism in stimulating the economic development of the state, the Government of Kerala declared tourism as an industry in 1986. Today tourism is Kerala's boom industry and one of the fastest growing, high income and employment generating sector. Constant efforts are on to promote Kerala abroad and marketing strategies are being evolved along with new and exciting tourism products. In addition to the State Department of Tourism, several private entrepreneurs too are playing a major role in improving facilities and setting up infrastructure at places with tourism potential.

Ever since tourism was declared an industry several incentives which were available to investors in other industrial sectors have been extended to the Tourism Sector as well by the State Government. These include subsidies, technical guidance, marketing assistance, publicity through governmental publications, help in availing loans etc. Apart from these state incentives, approved tourism related projects are also eligible for incentives from the Government of India.

G.O (P) No. 224/86/GAD dated 11.7.1986 of the Government of Kerala lays down the guidelines for sanctioning and disbursing subsidies to tourism related projects approved by the Department of Tourism.

The State Investment Subsidy at present is 10% of the investment with maximum ceiling limit of Rs. 10 lakhs

Projects eligible for subsidies/concessions

i) Classified hotels approved by the State/Central Government

ii) Motels (approved by Department of Tourism, Government of Kerala)

iii) Restaurants (approved by the Classification Committee of the Government of India)

iv) Amusement parks and recreation centres approved by the Department of Tourism, Government of Kerala.

v) Ropeways at tourist centres

vi) Purchase of luxury cars (minimum of 5 cars), coaches, boats, aircraft etc., by tour operators approved by the State/Central Department of Tourism

vii) Construction of structures like koothambalam/auditorium etc., by schools/institutions teaching Kalaripayattu and traditional art forms of Kerala.

viii) Institutions teaching surfing, skiing, gliding, trekking and similar activities which will promote tourism

ix) Ayurveda centres approved by the Department of Tourism

x) Building of traditional boats like chundan, iruttukuthy, veppu, kettuvallam and houseboats

xi) Exclusive handicrafts emporia (approved by the State/Central Department of Tourism)

• Ayurveda centres/hotels within the Corporation limits of Thiruvananthapuram, Kochi and Kozhikode will not be eligible for investment subsidy.

• Those units which are enjoying any form of investment subsidy from any other department of the State/Central Government will not be eligible for subsidy under this scheme.

• The investment subsidy will be available for the new units and also for the expansion of the existing units.

Components eligible for subsidy

Land and building

The actual price paid for the land and building including development charges to the extent needed for the purpose of the tourism unit will be taken into account for the sanction of investment subsidy. Where land or building is held in premium lease arrangement, premium paid by lease holder will be eligible for the subsidy. Where the land or building is already owned by the tourism unit the market value thereof as assessed by the local body authorities will be taken for the purpose of fixing capital investment. Rent of hired building will not be taken into account.

Only that portion of the building which is used for a unit will be eligible for consideration for subsidy. For example shops which form part of the hotel but which are independent will not be eligible for the investment subsidy. However, book shops, curio shops etc., which are an integral part of a hotel will be eligible, if they are directly run by the unit. If a hotel has other facilities which are let out like cloth shops etc., subsidy will be given for the total area minus the land/building set apart for other shops etc.

Note: For sanctioning subsidy the value of land will be calculated only at 10% (maximum) of the total cost of the Project whatever be the area or cost of the land.

Plant and machinery

In calculating the value of the plant and machinery, the cost of plant and machinery as erected on site, will be taken into account.

Only new machinery and imported old machinery will be eligible for subsidy. In the case of new machinery, invoice price will be accepted and in the case of old machines the valuation will be made as follows:

a) Valuation on the basis of the original price minus depreciation, present market value or the actual price paid at the time of import, whichever is less, in the case of imported machinery. The valuation will be certified by a Chartered Accountant.

b) The effective life of the machinery imported should not have expired at the time of purchase/transfer. It should be in good condition capable of satisfactory production result for a period of at least 5 years from the date of purchase/transfer.

Procedure for claiming subsidy

How to apply for state investment subsidy

Your application for state investment subsidy shall be made in quadruplicate in the enclosed format and addressed to the Director, Department of Tourism, Govt. of Kerala, Park View, Thiruvananthapuram 695 033.

Documents to be enclosed with the application (in quadruplicate)

a) Project report wherever it is prepared

b) Details of the scheme including the details of the fixed assets to be acquired

c) Sanction letter from the financial institution sanctioning loan or loans taken for the purpose of implementing the project

d) If the project is under implementation, a certificate from a Chartered Accountant regarding the capital expenditure incurred on the project and the certificate from an Engineer certifying the civil works done, in the prescribed form.

Procedure for approval

The Director of Tourism, with whom the application for investment subsidy is filed, will examine the application and after due scrutiny and inspection refer it to the state level committee with suitable recommendations. The state level committee will decide whether the unit is qualified for the subsidy and the quantum of subsidy admissible.

Provision for recovery of state investment subsidy

The state investment subsidy sanctioned to a person or unit shall be recovered from him or from it as the case may be:

i. Where the tourism unit has obtained state investment subsidy by misrepresentation as to an essential fact or gives false information.

ii. Where the tourism unit goes out of business within 5 years of the date of commencement of service to tourists except in cases where units remain out of service for a short period extending to six months with a reason beyond their control.

iii. Where the tourism unit fails to furnish the prescribed information which it is called upon to furnish.

Statement of accounts/information to be furnished by eligible tourism units

Tourism units receiving state investment subsidy shall furnish to the Director, Department of Tourism, the annual Audited Statement of Accounts and Balance Sheet. Such statements of accounts are required to be furnished for a period of 5 years from the year in which disbursement of state investment subsidy is made. The eligible tourism unit should also furnish from time to time all the information required by the Director, Department of Tourism or by the state level committee.

Change of location of the tourism unit

The owner of a tourism unit, after receiving part or whole of the state investment subsidy, will not be allowed to change whole or part of the unit or effect any substantial reduction or disposal of a substantial part of its capital investment within a period of 5 years after its going into operation without prior approval of the Director, Department of Tourism.