A Boost for Tourism and Growth, ETTravelWorld
The Union Budget for FY 2026–27 presented by Finance Minister Nirmala Sitharaman in the Parilament on Sunday has been broadly welcomed by India’s travel and tourism industry, with stakeholders viewing it as a clear signal that tourism is now being treated as a strategic economic lever rather than a peripheral service sector. From rationalising outbound travel taxation to investing in destination development, skilling, sustainability and connectivity, the Budget for travel & tourism industry has drawn strong support across online travel platforms, hotels, airlines, tour operators and industry associations.While some gaps remain—particularly around overseas tourism promotion and structural reforms—the overall sentiment reflects cautious optimism that the government’s long-term approach could unlock sustained growth, employment and regional development.
TCS rationalisation: Removing a long-standing friction point
One of the most immediately impactful announcements for consumers and travel companies alike is the rationalisation of Tax Collected at Source (TCS) on overseas tour packages to a flat 2%, without any value threshold, replacing the earlier 5% and 20% slab structure. The reduction of TCS under the Liberalised Remittance Scheme (LRS) for education and medical purposes from 5% to 2% has also been welcomed.Rajesh Magow, Chair, FICCI Tourism Committee and Co-founder & Group CEO, MakeMyTrip, described the move as a necessary correction.
“The rationalisation of TCS on overseas tour packages is a welcome step that addresses upfront liquidity impact on Indian outbound travellers. As demand for travel continues to broaden across segments, reducing friction at the planning and payment stage will help sustain momentum,” he said, adding that infrastructure-led investments have already played a critical role in supporting domestic tourism growth.
Rikant Pittie, CEO and Co-Founder, EaseMyTrip, echoed this view, noting that a flat TCS structure would improve booking sentiment. “Lowering the upfront financial burden will enhance affordability and encourage more Indians to plan international travel with confidence,” he said.
For Yatra Online, the reform is about predictability and scale. Siddhartha Gupta, CEO, Yatra Online Limited, said, “By lowering the upfront cash outgo and simplifying the structure, the TCS reform removes a long-standing friction point in outbound travel planning. This should support healthier and more consistent demand.”
Mahesh Iyer, Managing Director & CEO, Thomas Cook (India), added that the TCS reduction on education and medical remittances was equally significant, especially in the context of currency pressures. “This eases compliance and unblocks cash flows for travellers and families at a time when overseas education and medical travel are becoming increasingly important.”
Connectivity and infrastructure drive tourism dispersal
The Budget’s emphasis on connectivity—through high-speed rail corridors, highway expansion, new waterways, seaplane operations and improved regional access—has been widely seen as foundational to tourism growth.
Aloke Bajpai, Group CEO, and Rajnish Kumar, Group Co-CEO, ixigo, highlighted that increased allocations for rail and road infrastructure would directly support tourism beyond metros. “The focus on Tier-II and Tier-III cities, temple towns and city economic regions will result in a big boost for tourism demand in these markets,” they said, adding that smoother airport and baggage processes would improve inbound traveller experience.
Siddhartha Gupta of Yatra pointed out that improved inter-city connectivity would strengthen corporate travel, MICE and long-stay demand in emerging cities. “This creates a stronger base for business and leisure travel beyond the largest metros,” he noted.
From a hospitality perspective, Nikhil Sharma, Managing Director & COO, South Asia, Radisson Hotel Group, said infrastructure-led destination development would support balanced regional growth. “Expanding rail connectivity and destination-led tourism beyond metropolitan centres creates a strong foundation for tourism to scale responsibly across India,” he said.
Hospitality, skilling and institutional capacity-building
A major highlight of the Budget for the hospitality sector is the announcement to establish a National Institute of Hospitality by upgrading the National Council for Hotel Management and Catering Technology, alongside a pilot initiative to upskill 10,000 tourist guides across 20 iconic destinations.
Anil Chadha, Managing Director, ITC Hotels Limited, described the move as a strong vote of confidence in tourism’s role as a livelihood generator. “Upgradation of hospitality institutions and structured guide skilling will significantly strengthen service quality and global competitiveness,” he said, adding that the push towards a digital and AI-enabled tourism knowledge framework would enhance discoverability and destination management.
Jyoti Mayal, Chairperson, Travel Hospitality Skill Council (THSC), called the National Institute of Hospitality “transformative” for building a future-ready workforce. “Coupled with guide training and improved connectivity, these initiatives will enrich visitor experiences and create sustainable employment,” she said, while reiterating concerns about the absence of dedicated marketing funds.
Surendra Kumar Jaiswal, President, FHRAI, noted that the focus on cultural, spiritual, heritage and medical tourism—along with digital knowledge grids and sustainable trails—signals a clear intent to professionalise and diversify India’s tourism ecosystem.
Sustainability, experiential and medical tourism gain momentum
A key announcement is the creation of a National Destination Digital Knowledge Grid, which will digitally document India’s culturally, spiritually and historically significant locations. The initiative is expected to create a unified national repository of tourism assets, improving destination management, interpretation and discoverability while supporting evidence-based planning for states and local bodies.
The Budget’s focus on sustainable and experiential tourism—including trekking and hiking trails, wildlife circuits and Buddhist circuits across the Northeast—has resonated strongly with industry leaders.
Vishal Suri, Managing Director & CEO, SOTC Travel, said these initiatives would enhance product depth and attract investment across the tourism value chain. “Nature-based and experiential tourism will diversify offerings and support demand across seasons,” he said.
Zubin Karkaria, Founder & CEO, VFS Global, added that the emphasis on medical tourism hubs, skilling and institutional support would strengthen India’s global positioning. “These measures will have an enduring impact on service quality, destination readiness and ease of doing business,” he said.
Aviation and logistics: Long-term capacity-building
Ajay Singh, Chairman and Managing Director, SpiceJet, viewed the Budget through a broader economic lens, highlighting its focus on long-term capacity-building rather than short-term stimulus. He noted that disciplined capital expenditure and infrastructure investment would provide stability for sectors such as aviation that are sensitive to global volatility.
Manjari Singhal, Chief Growth and Business Officer, Cleartrip, said improved multimodal connectivity would boost traveller confidence to explore new regions, supporting both domestic and inbound tourism growth.
Industry flags gaps in marketing and structural reforms
Despite the positive thrust, several industry bodies flagged the absence of a dedicated budgetary allocation for overseas tourism promotion.
At an industry-body level, Ravi Gosain, President, Indian Association of Tour Operators (IATO), said the Budget’s focus on tourism as an employment and forex engine was timely. He welcomed institution-building initiatives such as the National Institute of Hospitality and large-scale guide skilling, while highlighting the emphasis on eco-tourism, trekking and wildlife trails as being aligned with global shifts towards sustainable and experiential travel.
At the same time, industry associations flagged areas requiring further attention. Rajiv Mehra, General Secretary, FAITH, said the focus on adventure tourism, guide skilling, AI-led destination development and the reduction in TCS were progressive steps, but added that the absence of a dedicated allocation for overseas tourism promotion remained a concern. Strengthening India’s visibility in global markets, he said, would be critical to accelerating inbound tourism.
KB Kachru, President, Hotel Association of India (HAI), said the Budget reflects strong intent to drive tourism-led growth through infrastructure, skilling and destination development, particularly in emerging cities. However, he reiterated the need for wider infrastructure recognition for tourism projects and GST rationalisation to improve access to capital and enhance competitiveness.
Stakeholders across travel, tourism, hospitality and aviation sectors broadly agreed that Union Budget 2026 marks a shift towards long-term capacity building rather than short-term stimulus.
