Service Sector Current Affairs

Government approves Guidelines on service charge

Ministry of Food and Consumer Affairs has approved the ‘Guidelines on Fair Trade Practices Related to Charging of Service Charge from Consumers by Hotels and Restaurants’. As a part of the guidelines which has been issued in public interest to protect the rights of consumers, the government has said that Service charge on hotel and restaurant bills is “totally voluntary”, adding that mandatory levy of service charge amounts to unfair trade practice.

As per the guidelines, Hotels and restaurants cannot decide on service charge and the column of service charge will be left blank in the bill for the customers to fill up before making payment.

The guidelines have also stated that in a case of mandatory levy of service charge, customers can file a complaint in the Consumer Court. However, at present, stringent action cannot be taken against the erring hotels as the current Consumer Protection Act, 1986 does not empower the ministry to do so. But, under the new Consumer Protection Bill, an authority is expected to be set up with powers to take such actions.

Rationale

Department of Consumer Affairs has justified the guidelines in view of complaints received by it from consumers that some hotels are insisting payment of service charge in the range of 5-20 per cent and many people are paying it believing that it is part of taxes.

As per the guidelines, a component of service is already inherent in the provision of food and beverages ordered by a customer. Hence, the price of food and beverages is expected to cover both goods and service components.

HRAWI’s Response

The Hotel and Restaurant Association of Western India (HRAWI) has not welcomed the guidelines by saying that levying of service charge is a global practice and a legitimate tax, adding that it has been in India for more than half a century. It has accused the government of singling out the sector as hospitality sector and several businesses are levying such charges.

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President inaugurates Global Exhibition on Services (GES-2017)

President has inaugurated Global Exhibition on Services (GES-2017) that is set to highlight India’s potential to boost its services exports across sectors at India Expo Mart, Greater Noida. The event has been organised by the Ministry of Commerce and Industry together with the Confederation of Indian Industry (CII) and Services Export Promotion Council. This is the 3rd edition of GES and the earlier editions were held in 2015 and 2016. This edition is set to see the participation of over 70 countries and comes in the backdrop of increased focus on services trade and India’s submission to the World Trade Organisation on trade facilitation in services.

The main focus of the event will be on 20 services sectors, including information technology, tourism and hospitality, logistics, education and financial services.

This year, the Indian Space Research Organisation (ISRO), will showcase its offering of application of space technology on a real-time basis for implementing and monitoring of public programmes. Besides, the Ministry of Tourism will host Incredible India Haat, a cuisine, culture and handicrafts show.

Objectives

  • Position India as a leader in the services sector
  • Tap potential for exports in the services sector
  • Draw investments into the country in the services sector

Service sector

India’s services exports stood at $146.5 billion in the first 11 months of 2016-17, growing at 3 per cent. It has witnessed a surplus of $59 billion in April-February 2016-17. In India, IT and software services accounted for over 48% of overall services exports. As per provisional estimates released by RBI, the service export touched US $ 80 billion as against US $ 77 billion in the time period from April to September 2016, a rise of almost 4%. A strong services sector backed by a manufacturing sector is expected to play a pivotal role in the growth of Indian economy.

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