Trade pushes for ‘Viksit Bharat’ alignment in 2026 Union Budget as tourism matures
India’s tourism and hospitality sector is making its voice heard. Ahead of the Union Budget 2026, industry leaders are pressing for reforms that align with the nation’s Viksit Bharat 2047 vision. The timing matters. The sector contributed ₹21.15 lakh crore to India’s GDP in 2024 and currently supports nearly 63 million jobs.
But there’s a gap between potential and reality. The industry believes that without targeted policy interventions, India’s tourism ecosystem will continue to underperform against global competitors.
What the Tourism Trade Wants
The Hotel Association of India (HAI) is leading the charge with specific demands. Infrastructure status for hotels tops the list. This designation would lower financing costs and improve credit access for hospitality businesses across the country.
K B Kachru, HAI President and Chairman of Radisson Hotel Group’s South Asia operations, emphasizes the sector’s economic contribution. Hotels generate foreign exchange earnings. They create jobs across skill levels. Yet policy recognition remains limited.
The association wants more than symbolic gestures. They’re asking for:
- Infrastructure status for all hotels, regardless of location or star rating
- Single-window clearance systems to reduce bureaucratic delays
- Reward schemes for foreign exchange earnings to be reinstated
- Higher depreciation rates for hotel assets to attract investment
- Industry benefits extended to tourism businesses
GST Reform: The Persistent Ask
GST rationalisation remains a focal point. The current tax structure creates friction for travelers and businesses alike. Industry stakeholders want lower rates on accommodations, food services, and travel products.
Think of it this way: every percentage point reduction in GST translates to lower costs for domestic travelers. Lower costs mean more trips. More trips mean higher revenue across the entire ecosystem—airlines, hotels, transport services, and local businesses.
Sanjay Manohar Vazirani, Chairman and Managing Director of Foodlink F&B Holdings, points to specific pain points. Place-of-supply rules for intermediary services need correction. Section 74 cases require amnesty relief. Minor e-way bill violations shouldn’t trigger excessive penalties.
The industry also seeks clarity. Compliance norms that shift unpredictably make long-term planning difficult. Stable regulations help businesses invest with confidence.
Connecting Viksit Bharat to Tourism Growth
The Viksit Bharat 2047 vision sets ambitious targets. Zero poverty. Hundred percent skilled labor with meaningful employment. Seventy percent women participating in economic activities. Tourism aligns naturally with these goals.
The sector is employment-intensive. It creates opportunities across skill levels. A five-star hotel needs managers, but it also needs housekeeping staff, kitchen workers, and maintenance teams. Homestays in rural areas bring income to families that might otherwise lack economic options.
Regional development follows tourism investment. When the government develops destinations in partnership with states, local economies benefit. Infrastructure improvements—roads, airports, utilities—serve tourists and residents alike.
Alok K Singh, Chairman and CEO of SNVA Traveltech, frames it as a development opportunity. The sector supports millions across airlines, hospitality, transport, and allied services. It promotes cultural exchange and regional inclusion. These outcomes align with Viksit Bharat’s broader objectives.
What Budget 2025 Delivered—And What’s Missing
The 2025-26 budget allocated ₹2,541.06 crore to tourism. The government announced plans to develop 50 destinations through a challenge-mode approach with state partnerships. MUDRA loans for homestays received emphasis. The modified UDAN scheme aims to connect 120 new destinations over the next decade.
These initiatives matter. But industry voices suggest they’re insufficient.
Hotels were included in the infrastructure HML framework. Good start. However, the ask for infrastructure status across all hotel projects—irrespective of location and star rating—needs clarity and execution.
Skill development received attention through Institutes of Hospitality Management. Yet stakeholders want more robust support for training modules, regional hospitality skill centers, and apprenticeship pathways that match industry needs.
The Hotel Association of India notes that measures to support ease of doing business, tax rationalization, and reduction of high fixed operational costs still require attention.
Infrastructure and Connectivity: The Foundation
You can’t build tourism without infrastructure. It’s that simple.
India was ranked 39th in the World Economic Forum’s Travel and Tourism Development Index 2024. Infrastructure gaps contribute to this middling performance. International visitors face transaction costs that European or Southeast Asian destinations have systematically reduced.
Urban connectivity needs expansion. Last-mile connectivity to tourist sites remains weak in many regions. Regional airports and helipads in hilly and North-East areas require development funding.
The modified UDAN scheme addresses some concerns. Targeting 120 new destinations and four crore passengers over ten years signals intent. But execution will determine impact.
State-level initiatives complement central policy. Himachal Pradesh and Maharashtra run tourism campaigns and infrastructure grants. Performance-linked incentives for states could accelerate destination management improvements—better amenities, cleanliness, and marketing.
Medical and Wellness Tourism: The Hidden Growth Engine
Medical tourism deserves more policy attention. Treatment costs in India run 60 to 80 percent lower than in advanced economies. Post-care recovery and wellness spending can anchor sustained local economic activity.
Yet India lacks the institutional coordination that makes medical tourism work seamlessly. Europe integrates healthcare, transport, insurance, and urban planning into tourism systems. India treats these as separate silos.
The result? Higher transaction costs for international visitors. Loss of long-stay, high-value demand. Absence of insurance portability that reinforces dependence on episodic, out-of-pocket visits.
Integrated frameworks could link religious tourism, leisure travel, and medical-wellness mobility. Pilgrimage centers could connect with cultural and wellness circuits. Medical hubs could align with recovery destinations like Kerala, Rishikesh, or North-East locations.
Why Integration Matters
Consider a hypothetical visitor from Europe. They come for medical treatment in Mumbai or Chennai. Without coordinated systems, they face separate decisions about insurance, transport, accommodation, and follow-up care. Transaction costs rise. Experience quality drops.
Now imagine an integrated system. Treatment packages include recovery stays at wellness resorts. Insurance portability removes financial friction. Transport networks connect medical hubs to leisure and cultural destinations. The visitor extends their stay, spends more across the ecosystem, and returns home as an advocate for India.
That’s the difference between treating tourism as a collection of destinations versus treating it as a strategic services industry.
Credit Access and MSME Support
MSMEs form the backbone of India’s tourism sector. Small hotels, travel agencies, tour operators, and transport services need working capital and growth financing.
Current credit access remains challenging. Banks view tourism businesses as high-risk, particularly smaller operations without substantial collateral. Industry status would change this calculus by reducing perceived risk and lowering borrowing costs.
The 2025-26 budget raised credit guarantee cover for MSMEs to ₹10 crore. Startups received an increase to ₹20 crore with a trimmed guarantee fee of 1 percent for loans in sectors important to Atmanirbhar Bharat. Well-managed exporter MSMEs can now access term loans up to ₹20 crore.
These measures help. But tourism-specific credit mechanisms would have greater impact. Seasonal cash flow patterns, working capital for inventory and staff, and expansion financing for room additions or service improvements all require understanding of sector dynamics.
Skill Development: Quality Depends on People
Service quality determines competitiveness. And service quality depends on people.
India aims to attract 100 million inbound tourists by 2047 under the Vision@2047 initiative. Current infrastructure and workforce development must scale proportionally to handle this volume without quality degradation.
Institutes of Hospitality Management provide specialized training. But coverage remains limited. Regional skill centers would distribute training capacity more evenly. Apprenticeship programs that align with industry needs would create employment-ready graduates.
Skill development also matters for inclusion. The hospitality sector employs large numbers of women and differently-abled individuals. Expanding quality training creates economic opportunities for populations that might otherwise face barriers to employment.
Fiscal Reality and Budget Priorities
Finance Minister Nirmala Sitharaman will present her ninth consecutive Union Budget on February 1, 2026. The fiscal deficit is estimated at 4.4 percent of GDP, with total receipts other than borrowings at ₹34.96 lakh crore and total expenditure at ₹50.65 lakh crore.
These numbers constrain options. The government must balance fiscal discipline with growth priorities across multiple sectors—infrastructure, digital finance, manufacturing, clean energy, MSMEs, employment, healthcare, and education.
Tourism competes for attention and resources. The sector’s case rests on its multiplier effects. Money spent on infrastructure supports tourism but also benefits residents. Skill development for hospitality creates transferable capabilities. Regional connectivity improvements serve multiple economic activities.
Industry leaders understand the trade-offs. They’re not asking for blank checks. They want policy alignment that recognizes tourism’s contribution to employment generation, regional development, and services exports.
What Success Looks Like
Budget 2026 could mark a turning point if it addresses key industry demands.
Infrastructure status for hotels would lower capital costs and signal government commitment to the sector. GST rationalization would reduce friction for travelers and businesses. Expanded credit access for MSMEs would fuel growth among smaller operators who collectively employ millions.
Skill development funding aligned with industry needs would ensure service quality keeps pace with visitor growth. State-federal coordination on destination development would accelerate infrastructure improvements and marketing effectiveness.
Integration of medical, wellness, religious, and leisure tourism into coordinated frameworks would position India to capture high-value, long-stay demand that currently goes to competitors.
The World Travel & Tourism Council projects India’s tourism sector will reach ₹43.25 lakh crore by 2034. That growth trajectory isn’t guaranteed. It depends on whether policy supports match sector potential.
The Broader Context: Global Competition
India doesn’t operate in a vacuum. Thailand, Vietnam, Malaysia, and other regional competitors actively court international tourists with streamlined processes, competitive pricing, and coordinated service delivery.
Europe’s tourism success stems from institutional design. Countries treat tourism as a coordinated system spanning healthcare, transport, insurance, and urban planning. They’ve reduced transaction costs and created seamless experiences for visitors.
India’s approach has been more fragmented. Separate ministries handle different components. State governments operate independently. Private sector coordination remains limited.
The Viksit Bharat vision offers an opportunity to change this. By explicitly linking tourism to national development goals—employment, regional growth, services exports—the government can justify the institutional reforms needed to compete effectively.
Moving Forward
The tourism trade’s budget asks are specific, measurable, and grounded in economic logic. Infrastructure status. GST reform. Credit access. Skill development. Regulatory stability.
These aren’t luxuries. They’re prerequisites for the sector to fulfill its role in India’s economic transformation.
Finance Minister Sitharaman’s budget will reveal whether the government shares this view. Industry leaders are watching. Investors are watching. And critically, competitors around the region are watching to see if India will modernize its tourism policy framework or continue with incremental adjustments.
The Viksit Bharat 2047 timeline gives India 23 years to achieve developed nation status. Tourism offers a clear path to contribute—if policy supports match ambition.
