They are running out of working capital and finding it difficult to meet financial obligations such as staff salaries, taxes
The amusement and theme parks, which play a significant role in the promotion of the country’s tourism and leisure industry, appear to be staring at a bleak future with complaints of financial distress and bankruptcy due to months of closure in the wake of the COVID-19 pandemic.
“The pandemic has forced many attractions to shut shop and many more are on the brink of closure. Amusement parks and attractions are set up with huge capital costs and employ a very large number of local people”, said Ashwin Dange, Chairman of Indian Association of Amusement Parks and Industries (IAAPI), Southern Region, in a statement here.
Hit by the pandemic just when it was taking “baby steps in India”, the amusement park industry is “running out of working capital and is finding it difficult to meet its financial obligations such as staff salaries, advance tax, GST, PF (Provident Fund) and ESI (Employees State Insurance) and other state levies, interest on loans and instalment payments”, the IAAPI contended.
Approximately 30 to 35 per cent of its visitors are outstation visitors and thus a major source of tourism, the IAAPI statement said while adding that the amusement parks industry in India attracted more than 3 crore visitors annually and was growing at a compounded annual growth rate (CAGR) of more than 17.5 per cent with an estimated annual revenue of ₹17 billion and providing direct employment to over 75,000 people.
“In India, amusement parks generated 60-65 per cent from gate income (ticket sales), 30-35 per cent from food and beverages and 10-15 per cent from merchandise and are now suffering losses due to the black swan event encountered by the world”, the statement said.
The IAAPI has also referred to the UN World Happiness Report 2021 in which India has secured the 139th position out of 149 countries. “The results of the report, which is based on Gallup World Poll, have been correlated with factors including GDP and social security. A reasonable explanation for the lower rank in happiness index can be that India’s people expect better and they are feeling disappointed. The idea of rising expectations and increasing inequality and feelings of injustice or unfairness are also plausible contributing factors for the Happiness Index Report”, the IAAPI statement said.
IAAPI Chairman Rajeev Jalnapurkar has written to Prime Minister Narendra Modi seeking reduction of effective rate of interest on loans from financial institutions, complete GST holiday for 12 months, moratorium of 12 months on payment to financial institutions, fiscal support for salaries, and waiver of customs duties on import of spare parts.
The IAAPI pointed out that the industry was on the verge of collapse and needs “instant emergency support.” “The only way this can happen is by reducing the fixed operating expenses significantly in the immediate term till consumption in the sector bounces back and economic activity revives”.
Mr. Dange, who is also the Business Head of GRS Fantasy Park in Mysuru, feared that the progress and investments made over the last several decades will be lost forever without the support and handholding by the government. “This will be a big blow to the tourism sector in India and will take decades to get back investor confidence in the sector”, he said in the statement.