The Union Budget 2025-26 outlines significant reforms aimed at boosting India’s tourism sector. While some demands remain unmet, the budget’s provisions reflect optimism for the dynamic tourism industry, aimed at fostering growth and increased opportunities for Indian businesses and international visitors.
Presenting the Union Budget 2025-26 in Parliament on February 01, 2025, Finance Minister Nirmala Sitharaman outlined several initiatives to boost tourism through investment-led growth and employment generation.
Tax Slab Revisions: A Boost for the Middle Class
A significant highlight of the Union Budget 2025-26 is the revision of tax slabs, specifically under the new tax regime. Sitharaman announced that individuals earning up to Rs 12 lakh annually will now be exempt from paying taxes, a significant increase from the previous Rs 7 lakh threshold. A Rs 75,000 standard deduction has been introduced for the salaried class. Sitharaman emphasised that these changes will “substantially reduce the tax burden on the middle class and leave more money in their hands.” This move is expected to stimulate household consumption, savings, and investment. For middle-class Indians, a key demographic for the travel industry, this could provide a significant boost, making travel more accessible and encouraging increased spending on travel.
Key Measures to Drive India’s Tourism Sector
The Union Budget 2025-26 has identified tourism as a sector for employment-led growth. Finance Minister Nirmala Sitharaman said that facilitating employment-led growth includes organising intensive skill-development programmes for youth, including hospitality management, MUDRA (Micro Units Development and Refinance Agency) loans for homestays, improving ease of travel and connectivity to tourist destinations, introducing streamlined e-visa facilities, and providing performance-linked incentives to states to improve tourist amenities, cleanliness, and marketing efforts.
She said that the country’s top 50 tourist destination sites will be developed in partnership with states through a challenge mode. The budget added that states will have to provide land for building key infrastructure, including hotels, and hotels in those destinations will be included in the infrastructure HML. The minister said that emphasis will be given to places of spiritual and religious significance, and there will be a special focus on destinations related to the life and times of Lord Buddha.
The minister further announced that the government would streamline e-visa facilities and introduce visa-fee waivers for certain tourist groups to attract more international visitors. Simplifying the visa process should encourage more international visitors, boost tourism, and further contribute to the economy. In her speech, Sitharaman also said that medical tourism and Heal in India will be promoted in partnership with the private sector. The initiative will focus on capacity building and relaxed visa norms to attract more international patients seeking medical treatment in India.
On the Gyan Bharatam Mission, the finance minister said that documentation and conservation of our manuscript heritage with academic institutions, museums, libraries, and private collectors will be undertaken to cover more than one crore manuscripts. She added that the government will set up a National Digital Repository of Indian knowledge systems for knowledge sharing.
Strengthening Regional Air and Sea Connectivity
The finance minister highlighted that the UDAN scheme has already enabled 1.5 crore middle-class citizens to fulfil their aspirations for quicker and affordable travel. Building on this success, a modified version of the UDAN scheme will be launched to improve regional connectivity, targeting 120 new destinations and an expected four crore passengers over the next decade. The updated scheme will also support the development of helipads and smaller airports in hilly, aspirational, and North-East regions.
Furthermore, expanding Patna Airport and developing a greenfield airport will strengthen the country’s aviation infrastructure. Additionally, a brownfield airport will be constructed at Bihta, further boosting connectivity.
The Union Budget also proposes to facilitate ‘Shipbuilding Clusters’ to increase the range, categories, and capacity of ships. This will include additional infrastructure facilities, skilling, and technology to develop the ecosystem. For long-term financing for the maritime industry, the minister has proposed to set up a Maritime Development Fund with a corpus of Rs 25,000 crore.
A Relief with Revised TCS Limits
Another positive development is that the Union Budget 2025 -26 has introduced key changes to the Liberalised Remittance Scheme (LRS), significantly relieving Indian travellers, students, and medical tourists. One of the most notable updates is the Tax Collected at Source (TCS) threshold increase under LRS, which has been raised from Rs seven lakh to Rs 10 lakh. Previously, a 5 per cent TCS applied to international remittances exceeding Rs seven lakh. With this change, the threshold is now Rs 10 lakh, easing the tax burden on outbound remittances. This adjustment makes outbound tourism more affordable, allowing travellers to spend more abroad without additional taxes. Students studying overseas and patients seeking medical treatment abroad will benefit from reduced tax outflows on tuition and medical expenses. Indian businesses making overseas payments for services or investments will also enjoy a higher limit before applying TCS.
Tourism Sector Awaits Key Reforms
While certain segments of the tourism sector have gained, the international marketing budget for tourism has yet to see any significant increase. Despite ongoing efforts from industry players, the long-pending demand for official “industry status” remains unaddressed. Furthermore, the GST framework for the sector remains unchanged despite continued requests from travel and hospitality industry stakeholders. Though there is a mixed reaction, the travel and tourism industry has responded with a blend of optimism, perhaps anticipating further progress in the next budget.
Sunil Kumar, President, TAAI
Thanks to the Union Minister, the budget gifts relief to middle-income earners on several fronts. An excellent gesture is to exempt from tax, earnings up to Rs 12.75 Lakhs, excluding Capital Gains.
On Travel and Tourism, the much-awaited “Industry Status” continues to evade the stakeholders.
The various measures announced in Tourism reflect that the Government is finally focusing on higher revenue streams from Tourism. The TOP 50 Destinations to be developed in partnership with States in a “Challenge Mode” can support growth and higher employment. The modified UDAAN scheme will surely enhance regional connectivity. Getting extended to 120 new destinations boosts connectivity which will usher in more travel.
GST and TCS challenges the agencies are currently facing, will unfortunately continue. The only relief in TCS is the increase of the threshold from Rs 7 Lakhs to 10 Lakhs.
The government promoting homestays by extending MUDRA Loans will surely encourage the development of more “homestays” infrastructure to support and promote tourism.
Offering Visa fee waivers and e-visa options for certain tourist groups to be introduced is a welcome gesture, that will attract more visitors.
Focus on Medical Tourism and wellness centers in partnership with the private sector will help in capacity building.
Other features like special attention to destinations related to Lord Buddha; and incentives to states for effective destination management indicate the Government’s desire to focus on more Inbound and Domestic Tourism.
This is a welcome budget, with adequate attention focused on the Tourism Sector.
Prateek Hira, President and CEO, Tornos
Within the positive announcements by the Finance Ministry that include relaxation in visas for some countries, a focus on 50 tourist destinations, an infrastructure push and a few other initiatives, there is also a deep wound that has been inflicted on the tourism industry, particularly the inbound sector.
The budget includes only a slight increase of 4 per cent in the allocation for tourism, which is less than India’s inflation rate, but the worst part, which will have a ramification on the already bleeding inbound sector, is that the international marketing budget for tourism has been reduced to Rs.30 million, a reduction of 97 per cent of the already minuscule budget that India had for international tourism marketing. Interestingly, Rs.30 million is the budget of many mid-size and large companies for their own marketing and promotions.
This move of the Indian government is beyond anyone’s understanding and only points to the fact that India does not want inbound tourists or wants to earn foreign exchange through tourism. The move is in stark contrast to what the government of India speaks at different forums regarding making India a global hub and doubling its foreign tourist arrivals. In this budget, there was no mention of the tourism board, which is an incomplete exercise and could have set many issues right.
After the closure of international tourism offices and with no proper marketing strategy in place, the tourism board could have been a saviour. The granting of industry status to tourism and incentivising foreign exchange earnings through tourism for inbound operators was also not addressed in this budget. For the inbound tourism industry this budget has nothing to rejoice or to be happy about.
K.B. Kachru, Chairman, Radisson Hotel Group South Asia and President—Hotel Association of India (HAI)
The budget is progressive, especially focusing on tourism and job creation. The government’s commitment to developing 50 new destinations and improving infrastructure is promising. This year’s budget highlights the importance of promoting spiritual and medical tourism with neighbouring countries and simplifying visa processes to enhance international travel. Overall, the initiatives taken by the government in this year’s budget are steps in the right direction for the industry.
Vasudha Sondhi, MD, Outbound Marketing India
It is encouraging to see that, for the first time, our national budget formally recognizes tourism as a key driver of employment. Some of my expectations have been met, including initiatives for homestays and cleanliness without explicitly addressing waste management. The expansion of the UDAN regional connectivity scheme will play a crucial role in unlocking new travel destinations. Meanwhile, the Ayush visa, introduced two years ago, seems to have lost momentum; I am hopeful that the “Heal in India” initiative will gain traction and deliver the intended benefits.
Krishna Rathi, Senior Country Director, India Subcontinent and MEA, Agoda
Agoda acknowledges and celebrates India’s exciting potential as a top travel destination and is enthusiastic about the tourism plans announced in this year’s Union Budget. Investment in infrastructure enhancements and destination marketing in recent years has undeniably paid off. At Agoda, this is reflected in a 22 per cent year-on-year increase in inbound accommodation searches to India. With this year’s announced investments in the expansion of the UDAN scheme to connect 120 new destinations, enhanced support for homestays, and the development of top tourist destinations in collaboration with state governments, we are hopeful that India will sustain this momentum. Especially as this comes on top of continuing positive trends like visa easements and inspirational destination marketing campaigns promoting India’s diverse experiences and attractions.
Karan Agarwal, Director, Cox & Kings
The Union Budget 2025 takes a well-rounded approach to tourism, recognising its potential as a key driver of economic growth and employment. The plan to develop 50 destinations and prioritise spiritual and medical tourism is a step in the right direction. Streamlining travel with e-visas and fee waivers will make India more accessible to international tourists, boosting arrivals.
The focus on public-private collaboration in developing 22 top destinations is particularly encouraging. It signals a shift towards structured, long-term growth rather than short-term measures. With the proper execution, these initiatives can strengthen India’s position as a leading global tourism destination while creating significant employment opportunities across the sector.
Rajesh Ghanshani, Director of Partnerships, STAAH
We are glad to learn that the Union Budget 2025-26 presents a promising outlook for the hospitality space. The government’s focus on providing infrastructure status to hotels in select tourist destinations will undoubtedly ease access to financial resources and enable much-needed development in key regions. Additionally, the introduction of initiatives like the promotion of medical tourism and the provision of Mudra loans for homestays will create avenues for rural tourism within the hospitality sector. This budget aligns well with the industry’s need for support in expanding its reach, fostering local businesses, and driving sustainable growth in 50 select destinations. With these measures, we look forward to seeing a more vibrant hospitality ecosystem that will benefit both businesses and the communities they serve.
Aditya Pande, Group Chief Executive Officer, InterGlobe Enterprises
This budget outlines a compelling roadmap for a Viksit Bharat. The focus on boosting consumption through targeted tax relief for the middle class, coupled with the government’s commitment to streamlining tax procedures, will significantly improve the ease of doing business and unlock further economic potential. At InterGlobe Enterprises, we are particularly encouraged by the strategic investments and vision for strengthening the holistic tourism ecosystem in the country with the development of infrastructure and focus on a skilled workforce. These initiatives lay a solid foundation for sustained economic progress and a brighter future for the country.
Chander Mansharamani, Vice Chairperson, ICPB
The Union Budget 2025 is a commendable step towards strengthening India’s tourism industry, with the development of 52 new destinations, improved connectivity under UDAN, and a strong focus on Buddhist, medical, and wellness tourism. These initiatives will not only enhance India’s appeal as a global travel destination but also open new avenues for the MICE (Meetings, Incentives, Conferences, and Exhibitions) industry.
As India continues to invest in tourism infrastructure and simplify travel procedures, it is crucial to recognise the economic and social impact of the MICE sector. The industry contributes significantly to business tourism, employment generation, and overall economic growth.
We at ICPB (India Convention Promotion Bureau) urge the government to prioritise the MICE industry within the tourism framework, ensuring policies and incentives that position India as a leading global MICE destination. With strategic initiatives, India has the potential to become a preferred hub for international conferences, exhibitions, and corporate events, driving long-term growth and positioning the country as a powerhouse in the global meetings industry.
Vinay Dube, Founder and CEO, Akasa Air
The Union Budget 2025 marks a significant step in supporting the sustained growth of India’s aviation sector. We commend the government’s commitment to infrastructure, which will make air travel more accessible, thereby boosting tourism and the economy as a whole.
Aligned with Viksit Bharat 2047’s vision, this focus on aviation strengthens India’s position as a global hub, ensuring greater mobility for all and contributing to a more connected, inclusive nation. As India’s fastest-growing airline, we applaud the government’s continued efforts to fuel the sector’s growth and make air travel accessible to a larger number of Indians.
Hussain Patel, Director, TripJack
The Union Budget 2025 reaffirms the government’s strategic vision to position India as a world-class tourism destination while driving employment-led growth. The initiative to develop 50 top tourist destinations in partnership with states, backed by improved infrastructure and including hotels in the infrastructure HML framework, will significantly enhance the country’s hospitality ecosystem. The emphasis on skill development through Institutes of Hospitality Management, easier access to MUDRA loans for homestays, and enhanced connectivity to tourist sites will empower local communities and entrepreneurs, creating sustainable employment opportunities.
Furthermore, performance-linked incentives for states to strengthen destination management—covering aspects such as tourist amenities, cleanliness, and marketing—will ensure a superior travel experience for visitors. The continued focus on spiritual and religious tourism, particularly destinations associated with Lord Buddha’s life and legacy, aligns with India’s rich cultural and heritage-driven tourism potential. Simplified e-visa procedures and visa-fee waivers for select tourist groups will make India more accessible to global travellers, reinforcing its position as a vibrant and diverse tourism hub. Promoting medical tourism in collaboration with the private sector, in addition to capacity building and easing visa application norms will also provide a huge fillip to India’s tourism sector.
Arun Bagaria, Co-Founder and CEO, TravClan
TravClan welcomes the budget’s robust focus on tourism as a significant engine for economic growth. The government’s plans to develop 50 tourist destinations, enhance e-visa facilities, and introduce visa fee waivers for select countries are encouraging steps that will help create a more vibrant and inclusive tourism ecosystem. As we continue to support travel agents in delivering exceptional experiences, we see these initiatives as key to strengthening India’s global appeal and fostering sustainable growth within the travel industry. We are hopeful that these measures will benefit all stakeholders and further enrich the journeys of travellers worldwide.
Dr. Sanjay Sethi, Managing Director and CEO, Chalet Hotels Limited
The Union Budget 2025 has outlined a set of impactful initiatives that will play a pivotal role in boosting India’s tourism sector, underscoring the government’s dedication to advancing the travel and hospitality industry. Key measures, including visa-free access for specific foreign groups, simplified e-visa procedures, and the expansion of the UDAN scheme to 120 new destinations, will significantly improve connectivity and ease of travel, benefiting both domestic and international tourists.
The planned development of 50 key tourist destinations in collaboration with state governments is a game-changer. It will ensure better infrastructure, improved connectivity, and world-class amenities. This will elevate India’s global tourism competitiveness and encourage private-sector investment in the hospitality ecosystem.
The government’s focus on medical tourism is another welcome move that positions India as a leading global hub for high-quality healthcare and wellness services, driving demand for hospitality and allied sectors. More significantly, increasing disposable income for consumers will drive overall spending, stimulate domestic tourism, and boost demand for hotels and travel services. Given tourism’s crucial role in job creation and economic growth, these initiatives will serve as powerful catalysts for long-term expansion.
Sarbendra Sarkar, Founder and MD, Cygnett Hotels and Resorts
The Union Budget’s strategic emphasis on tourism is a welcome move that will significantly boost India’s hospitality industry. The development of 50 key destinations under challenge mode, along with streamlined e-visas and visa-free access for select tourist groups, will drive international footfall and enhance India’s global appeal. The government’s initiative to include new hotels coming up in 50 key destinations in the infrastructure harmonized list (HML) for projects where land will be provided by the state governments is a welcome step. This will help hospitality investors to avail infrastructure lending at easier terms with enhanced limits and offer access to larger amounts of funds as External Commercial Borrowings (ECBs).
The government’s plan to introduce a modified UDAN scheme for strengthening connectivity to an additional 120 destinations and supporting helipads development in northeastern region will help to connect potential tourist destinations in the region.
Particularly, the focus on the Buddhist Circuit presents immense opportunities for hospitality expansion. With greater infrastructure and promotion around these culturally significant sites, we see strong potential to develop quality accommodations and travel experiences in these regions, catering to both domestic and international travelers.
Additionally, skill development initiatives through IHMs and financial support for homestays via Mudra loans will strengthen the sector, ensuring high-quality service and deeper community involvement in tourism growth. Cygnett Hotels is keen to align with these initiatives, expanding our footprint in high-growth destinations and playing a pivotal role in India’s tourism success story.
Ayu Tripathi, Director, Aahana Resort
We appreciate the government’s forward-looking vision for India’s tourism sector as outlined in the Budget FY2025-26 presented by Finance Minister Nirmala Sitharaman. The comprehensive measures announced demonstrate a clear commitment to strengthening tourism infrastructure and enhancing the overall visitor experience across the country. The plans to develop 50 premier tourist destinations and the successful air connectivity to 120 new destinations will enable an additional four crore passengers over the next 10 years to explore India, showcasing promising growth potential. The emphasis on diverse segments, including spiritual, religious, and medical tourism, suggests potential opportunities for varied tourism experiences across India. As industry stakeholders, we welcome these developments and look forward to contributing to India’s growing hospitality, travel, and tourism landscape.