Meghalaya Tourism Development and Investment Promotion Scheme 2012

What is the Meghalaya Tourism Development and Investment Promotion Scheme?

Meghalaya Tourism Development and Investment Promotion Scheme 2012 is a capital assistance scheme of the Tourism Department, Government of Meghalaya, notified by the Governor of Meghalaya on 20 January 2012 under notification No. Tourism.92/2010/81 and administered through the Directorate of Tourism, Shillong.

The scheme exists to close a specific gap. Meghalaya's tourist season produces more visitors than the state has beds, and the shortage is sharpest outside Shillong. Rather than build accommodation itself, the Tourism Department pays private entrepreneurs part of the cost of creating it, in the form of homestays and resorts. The notification describes the scheme as "assistance for creation of tourism infrastructure in the form of homestays and resorts".

The scheme document is organised in four chapters plus four formats, Chapter I describes the incentive, Chapter II the construction specifications, Chapter III the instructions to entrepreneurs, and Chapter IV the minimum standards to be maintained in the created facility. Format I is the application, Format II the affidavit, Format III A and III B the pre-inspection and joint pre-inspection reports, and Format IV the bank's utilisation certificate.

Key facts

• Assistance: 30 per cent of project cost for both components.
• Homestay ceiling: project cost limited to Rs 16.00 lakh, so assistance up to Rs 4.80 lakh, for a maximum of 4 rooms.
• Resort ceiling: project cost limited to Rs 1.00 crore, so assistance up to Rs 30 lakh, for a minimum of 10 rooms.
• Entrepreneur's own contribution: 2 per cent of project cost.
• Balance: term loan from a bank or financial institution.
• Application fee: Rs 5,000, non-refundable.
• Completion period: 12 months (homestay), 18 months (resort).

Who is eligible for the tourism investment incentive?

You can apply if:

• You are an entrepreneur setting up a homestay or a resort in Meghalaya.
• Your unit is being set up on or after 20 January 2012, the date of notification. The scheme is expressly available only for units set up on or after the notification date.
• For a resort, you own the land for the project. For a homestay, you are the owner of the property with a built-up house: homestays are defined as private houses providing accommodation to tourists with bed and breakfast.
• Your project cost is within Rs 16.00 lakh (homestay) or within Rs 100.00 lakh (resort). Larger projects are not disqualified, but assistance is capped at 30 per cent of the ceiling.
• Your loan case is under consideration with a bank or financial institution holding a valid licence, and you have a Detailed Project Report submitted to that lender.
• You will follow the Minimum Wage policy of the Government.

You are not eligible and cannot apply if:

• You are not building tourist accommodation. This is an infrastructure incentive for homestays and resorts, not a personal benefit, a travel subsidy or a loan to a tourist business of another kind.
• You do not own the project land for a resort, or do not own the built-up house for a homestay.
• Your project is already funded by another scheme. The scheme requires the project report to show the means of finance specifically to avoid doubling of incentives for the same project from two or more organisations.
• Your project is entirely self-financed with no lender, since the assistance is disbursed to the financial institution providing the loan.
• Your unit was set up before the notification date of 20 January 2012.
• Components of the project not included in your proposal and not part of the bank's appraisal note. Those specific components are not eligible for incentive even if the rest of the project is.

What does the scheme pay for a homestay?

For homestays, the notification allows assistance of 30 per cent of the project cost, limiting the project cost to a maximum of Rs 16.00 lakh. The conditions attached:

• A maximum of 4 rooms may be constructed under the scheme.
• Each room must have a minimum area of approximately 15 sq m.
• Each room must consist of a bedroom and an attached toilet with modern fittings and a walk-in closet.
• The entrepreneur's contribution is 2 per cent of project cost.

The indicative Rs 16.00 lakh project cost in the scheme breaks down as building cost Rs 10.00 lakh, plant and equipment including kitchen equipment, cutlery and crockery Rs 3.50 lakh, pre-operative expenditure such as registration fees and start-up expenses Rs 2.00 lakh, and a contingency provision of Rs 0.50 lakh. The means of finance are entrepreneur's contribution Rs 0.32 lakh, term loan Rs 10.88 lakh and assistance Rs 4.80 lakh. Construction time is taken as 12 months at a rate of Rs 16,666 per sq m.

What does the scheme pay for a resort?

For resorts, the notification allows assistance of 30 per cent of the project cost, limiting the project cost to Rs 1.00 crore, with these conditions:

• The resort must have a minimum of 10 rooms in the form of cottages.
• Each cottage must have a minimum plinth area of 24 sq m.
• There must be a central reception area with lobby, restaurant and kitchen of approximately 240 sq m built-up area.
• The entrepreneur's contribution is 2 per cent of project cost.

Resorts are to be preferably built beyond Shillong, so that tourists stay at the destinations listed for development and income and jobs move to those locations. The indicative Rs 100.00 lakh cost breaks down as building cost Rs 80.00 lakh, plant and equipment Rs 15.00 lakh, pre-operative expenditure Rs 4.00 lakh and contingency Rs 1.00 lakh, financed by entrepreneur's contribution Rs 2.00 lakh, term loan Rs 68.00 lakh and assistance Rs 30.00 lakh. Construction time is taken as 18 months.

Both components allow either Meghalaya Assam-type construction: RCC framed building with CGI sheet roofing — or RCC framed construction with an RCC roof, in both cases with branded ISI-marked bathroom fittings, porcelain water closet, cistern and basin, chrome-plated bib cocks and towel rails, and a provision for solid waste management with incinerators and rain water harvesting.

How to apply for the tourism investment incentive

1. Obtain the application form and scheme brochure from the Directorate of Tourism by paying Rs 5,000 through a demand draft drawn in favour of Director Tourism, Meghalaya, Shillong. The amount is non-refundable.
2. Prepare a Detailed Project Report and submit it to a bank or financial institution, and obtain a letter confirming that the loan case is under consideration.
3. Complete the application in Format I, addressed to The Director Tourism, Meghalaya, Shillong, and swear the affidavit in Format II.
4. Attach the enclosures listed in Chapter III; identity and existence of the applicant, copy of the record of right over the project land, the affidavit, the demand draft, the last income tax return if any, the Detailed Project Report, the bank's letter, a key map of the project land showing layout, boundary features, water and electricity sources and existing land use, and the NOC for creating such a facility in that area.
5. Submit the complete application to the Directorate of Tourism, Shillong. The Directorate then scrutinises the documents to confirm that the land is in your name and free of any mortgage or burden, that the activity is permissible under the scheme, that the lender holds a valid licence, that the project is not being funded twice, and that the implementation schedule is within 18 months for a resort or 12 months for a homestay.
6. Attend the pre-inspection (Format III A) by Tourism officials at the project site, and the joint pre-inspection (Format III B) by Tourism and bank officials, which assess site suitability, tourist attraction of the area, electricity and water sources, existing tourist flow, existing accommodation, the key map, your skill level and the project report.
7. Await the decision of the committee headed by the Director of Tourism with technical personnel, which screens applications and makes the final recommendation. Disbursement to the bank is made on that recommendation.
8. Register with the Tourism Department and sign the formal Agreement before the assistance is released to the bank or financial institution.
9. On completion, inform the lender that the unit is operational, undergo the post inspection or post joint inspection by bank and Tourism officials in your presence, and have the bank issue the utilisation certificate in Format IV.

What obligations come with the incentive?

The scheme's safeguards are stricter than the money suggests, and they are worth reading before applying:

• The incentive may be used only for creating homestay or resort infrastructure to accommodate tourists.
• Tourist statistics must be submitted to the Directorate of Tourism monthly, and inspections are carried out at regular intervals to confirm the facility is being used and operated as approved.
• If the accommodation created is misutilised at any point of time, the incentive is recovered from the entrepreneur through legal procedures.
• An entrepreneur established to have misutilised the incentive is barred from any further or future incentive or benefit from the Government.

Chapter IV sets minimum standards the facility must maintain: trained local staff in uniform, proportionate to the capacity of the unit; standard bone china crockery and hotel glassware with clean dish washing and storage areas; front desk staff conversant in English and regional languages with information on places of tourist interest; a displayed list of do's and don'ts; at least one electrician, plumber and sweeper available on a 24-hour basis; a power back-up system across the facility; clean restrooms with assessed water arrangements; a well-lit, paved, fenced and secured visitor parking area; and solid waste management with incinerators and rain water harvesting as part of the project.

Is this scheme still the one to apply under?

The 2012 notification remains the published Meghalaya Tourism Development and Investment Promotion Scheme on the Meghalaya Government portal, and it records that "Government reserves the right to make any amendments to the scheme from time to time". The Tourism Department has since announced a separate homestay programme. The Chief Minister's Meghalaya Homestay Mission Scheme, reported in the state press in May 2022, so an entrepreneur planning a homestay today should confirm with the Directorate of Tourism which of the two is currently open for applications before paying the Rs 5,000 for the form and brochure. This guide states only what the 2012 notification itself provides.

Help and contacts

• Directorate of Tourism / Meghalaya Tourism, 3rd Secretariat, Nokrek Building, Lower Lachumiere, Shillong 793001, Meghalaya.
• Phone: +91 364 222 0220.
• Email: info[at]meghalayatourism[dot]in.
• Application route: The Director Tourism, Meghalaya, Shillong, in Format I.
• Scheme text: the full 2012 notification is published as a PDF on the Meghalaya Government portal at meghalaya.gov.in.

Apart from the Rs 5,000 non-refundable cost of the application form and scheme brochure, no fee is payable to any person for processing an application under this scheme.