The issue would be brought shortly before the Cabinet for the approval. Both tourism and export ministries have favoured granting the export industry status to the tourism sector. However, only the finance ministry seems to be against the idea because it will have to forego taxes in the event of export status being granted to the tourism sector, according to the sources.

It was further pointed out that the loss of revenue in terms of income tax from this industry to the exchequer was not much and it would far exceed the benefits which would accrue in terms of foreign exchange realisation and employment generation, both direct and indirect.

Sources further said the issue for seeking concessions for the tourism industry was being being pursued vehemently by tourism minister Madan Lal Khurana. The minister had also assured in a recent meeting with the delegates of the Indian Association of Tour Operators (ITAO) that government would soon announce some steps for encouraging tourism sector on a sustained basis.

The argument being in favour of granting export status to tourism is that the government should fully exploit the foreign exchange earning potential of this sector. The sector generates Rs 12,000 crore annually and provides employment to 24 million people directly and 72 million people indirectly. The import content in this sector is negligible as compared to the other sectors engaged in exports.

The benefits of granting export status to the tourism sector, industry sources pointed out, would be manifold and the step should be taken soon to help the industry to make 1999 "visit India year" a resounding success. The biggest benefit, it was stated, would be that the sector would be able to access duty free import of various items which were necessary to make foreign tourists feel at home in India.Secondly, the policy would greatly encourage more entrepreneurs to join this sector because of tax benefits.

In the process, more facilities like hotels etc. would be set up attracting investment both foreign and domestic and generating employment direct and indirect in the process.