Starting an Adventure Travel Business in India

Published On - September 21, 2015

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Starting an Adventure Travel Business in India

Adventure travel is one of the fastest growing segments in the travel industry. According to a study by The George Washington University and Adventure Travel Trade Association, the adventure travel market has grown each year at nearly 65% since 2009. The study estimates the value of the global adventure travel sector to be US$263 billion, excluding airfare, up from US$89 billion first reported in the benchmark consumer study in the year 2009. The concept of adventure travel has really taken off in India with many youngsters preferring to undertake adventurous activities as a part of their travels.Activities like water sports, aero sports, mountaineering, trekking and safaris of various kinds fall under the category of adventure sports in India. In this article, we look at the procedure for starting an adventure travel business in India.

Business Registration

An adventure travel business is a high-risk business wherein the promoters are exposed to various financial liabilities in case of any mishap. Therefore, to protect the personal assets of the promoters and limit the liability in the business, it is very important to setup the adventure travel business as a private limited company or limited liability partnership (LLP). In case of a small adventure travel business having an annual billing of less than Rs.40 lakhs per year, a LLP is preferable. In case of an adventure travel business having more than Rs.40 lakh or above in billing, then it is best to start a private limited company.

Taxation

Adventure travel business would fall under the ambit of the service tax in India. Therefore, anyone operating an adventure travel business having an annual taxable service billing of over Rs.9 lakhs must obtain service tax registration. Service tax is presently chargeable at 14% in India. However, those operating a adventure travel business enjoy a service tax abatement of 60%. Therefore, the taxable portion is only 40% – making the effective service tax rate just 5.6%.

Adventure Tour Operator (ATO) Registration

The Government of India, Ministry of Tourism operates the approved adventure tour operator (ATO) registration scheme for recognition of Adventure Tour Operators (ATOs) and to encourage quality standard and service in this category. The ATO registration scheme is purely voluntary and can help the tour operator get Government recognition thereby increasing marketability.

Eligibility for Adventure Tour Operator Registration

Currently the Ministry of Tourism is providing ATO Registration under four categories as follows:

  1. Operators dealing with water sports.
  2. Operators dealing with aero-sports.
  3. Operators dealing with safaris of various types.
  4. Operators dealing with mountaineering and trekking.

The following criterion must be fulfilled by the Tour Operator to obtain the ATO Registration:

  1. The entity should have a minimum Paid up Capital (Capital employed) of Rs. 3.00 lakhs duly supported by the latest audited Balance Sheet / firm’s Statutory Auditor’s certificate.
  2. The turnover by the firm from Adventure Tourism & Adventure Sports related activities only should be a minimum of Rs.10.00 lakh during the preceding financial year duly supported by a certificate issued by Statutory Auditor of the firm.
  3. The minimum office space should be at least 150 sq. ft for rest of India and 100 sq. ft for hilly areas which are above 1000 meters from sea level. The office should be located in neat and clean surroundings and equipped with telephone, fax and computer/computer reservation system etc. There should be sufficient space for reception and easy access to toilets.
  4. ATO should have a minimum of four qualified staff as per the norms prescribed by the Ministry of Tourism for Adventure Tour Operators.
  5. The operator must have his own Adventure equipment as well as specialized trained staff.
  6. The field staff members of the party must be qualified for the activity or must have minimum of five years of practical experience. The staff member must obtain an Adventure certificate from the specialized organizations like IMF (for Mountaineering/trekking) & NIWS Goa (for Water Sports/Aero sports, etc.).
  7. Field members of the company must be qualified in First – Aid / C.P.R by Red Cross or equivalent body or Certificate Course conducted by the Adventure Tour Operators Association of India.

In addition to the above requirements, registered ATOs are required to maintain compliance with the guidelines provided by the Ministry of Tourism for operating adventure sports activities.
If the ATO satisfies the above conditions and agrees to act inline with the guidelines provided by the Ministry of Tourism, application for ATO registration can be made to the Ministry of Tourism, Government of India, New Delhi in the prescribed format.
Adventure Tour Operator recognition would be granted by the Ministry of Tourism, for five years, based on the Inspection Report / Recommendations of a Committee comprising the concerned Regional Director (RD) and a member of Adventure Tour Operators Association of India (ATOA).
To start or manage a business in India, visit www.complianceindia.co.in.