India’s travel and tourism sector is set for significant expansion. Its valuation is expected to more than double to $523 billion over the next decade.
According to Julia Simpson, President and CEO of the World Travel and Tourism Council (WTTC), the sector, which currently contributes around 7 per cent to India’s gross domestic product (GDP) and employs approximately 45 million people, is projected to support 63 million jobs by 2034.
With the Union Budget for FY2026 set to be unveiled on February 1, industry leaders are anticipating policy interventions that could accelerate this growth trajectory.
1. Infrastructure status: The hospitality sector, in particular, has pointed to the need for an ‘infrastructure’ status for the hotel industry— a move that would facilitate easier access to financing and spur investment, according to a recent report by Axis Securities.
2. Easing tax burden: Industry stakeholders have called for a series of reforms, including reductions in income tax rates for hospitality businesses, removal of Tax Deducted at Source (TDS) on automated bookings, and tax exemptions on Leave Travel Allowance (LTA).
LTA is a tax exemption salaried employees in India get for expenses incurred on domestic travel. It allows them to claim tax benefits on the cost of travel (by rail, air, or road) for themselves and their immediate family members while on leave. However, it does not cover expenses such as hotel stays, food, or sightseeing.
3. Rationalisation of GST: There is a demand for a simplified licensing process to set up hotels and the rationalisation of the Goods and Services Tax (GST) structure, particularly on room tariffs.
Rahul Uppal, Director at Echor Hotels Pvt Ltd, said that reducing GST slabs on premium stays would boost occupancy rates and encourage longer durations of stay, especially in boutique hotels situated in remote regions.
4. Unlocking potential of remote destinations: The government is also being urged to direct greater investment toward infrastructure that facilitates tourism growth beyond the traditional hotspots. Dharamveer Singh Chouhan, Co-founder & CEO of Zostel, spoke of the need to enhance accessibility to emerging destinations that promote local experiences and cultural tourism.
“Investments in indirect enablers such as transport infrastructure, connectivity, and improved access to remote areas will play a crucial role in unlocking the potential of unexplored destinations,” he noted.On that same tangent, Uppal said his company hopes to see “initiatives for skill development in local communities, empowering them to contribute to the growing tourism industry.”
5. Enhanced funding for medical, eco-tourism: Recent government marketing efforts have been promoting a broader range of tourism types including eco-tourism and adventure tourism. Greater impetus to pre-existing schemes like Swadesh Darshan are expected.
With inputs from agencies
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