Travel industry welcomes measures aimed at boosting tourism, but long-standing demands remain

New Delhi: Travel and hospitality industry insiders have welcomed budget announcements such as setting up a National Institute of Hospitality, developing high speed rail corridors and 15 archaeological sites and the reduction of TCS on overseas tour packages to 2% without any value threshold, but long standing demands remain.

While the overall budgetary allocation for 2026-2027 towards tourism has gone up to Rs 2438.4 crore from the revised 2025-2026 spends of Rs 1310 crore, the government has drastically slashed the marketing and promotion spends on domestic as well as overseas tourism to Rs 3.5 crore from Rs 103.4 crore. The travel industry had been seeking greater support for overseas promotions and industry insiders said the move will primarily hurt inbound tourism.

“The need has been felt to create more job ready people for the hospitality sector and more structured collaborations between the academia and the industry through a National Institute of Hospitality should aid job creation,” said KB Kachru, president of Hotel Association of India.


Siddhartha Gupta, CEO of Yatra said the reduction in overseas tour packages improves liquidity for travellers and the continued push on connectivity, and rail corridors will make inter-city travel more reliable and bring tier-2 and tier-3 cities into the mainstream of both business and leisure travel. In her budget speech, finance minister Nirmala Sitharaman has proposed to set up a National Institute of Hospitality by upgrading the existing National Council for Hotel Management and Catering Technology. She said it will function as a bridge between academia, industry and the Government. Other proposals include a pilot scheme for upskilling 10,000 guides in 20 iconic tourist sites through a standardized, 12-week training course in hybrid mode, in collaboration with an Indian Institute of Management. A National Destination Digital Knowledge Grid will also be established to digitally document all places of significance—cultural, spiritual and heritage. The finance minister said this initiative will create a new ecosystem of jobs for local researchers, historians, content creators and technology partners. The finance minister also said the government will develop ecologically sustainable mountain trails in Himachal Pradesh, Uttarakhand and Jammu and Kashmir, besides turtle trails along key nesting sites in the coastal areas of Odisha, Karnataka and Kerala; and bird watching trails along the Pulikat lake in Andhra Pradesh and Tamil Nadu. She also proposed to develop 15 archeological sites including Lothal, Dholavira, Rakhigarhi, Adichanallur, Sarnath, Hastinapur, and Leh Palace into ‘experiential’ cultural destinations. Excavated landscapes will be opened to the public through curated walkways. The finance minister said in order to promote environmentally sustainable passenger systems, it will develop seven high-speed rail corridors between cities as ‘growth connectors’ namely Mumbai-Pune, Pune-Hyderabad, Hyderabad-Bengaluru, Hyderabad-Chennai, Chennai-Bengaluru, Delhi-Varanasi, Varanasi-Siliguri. The proposals also include reducing the TCS rate on the sale of overseas tour program package from the current 5% and 20% to 2% without any stipulation of amount. Currently, overseas tour packages below Rs 10 lakh are taxed at 5% with a 20% TCS levied on packages above Rs 10 lakh. "By doing away with the threshold amount of Rs 10 lakh, the government has made the life of small tour operators even more miserable as now they need to collect 2% TCS on smaller amounts as well and then deposit file returns and issue TCS certificates for them. The paperwork will kill the industry," stated Amar Kedia, who runs luxury travel advisory firm TravelBluez in Mumbai.

Ajay Prakash, founder of Nomad Travels and the former president of Travel Agents Federation of India said by reducing the TCS on overseas packages and reducing the marketing spends on inbound tourism, the government is promoting overseas tourism at the expense of inbound tourism. “It has been illustrated that the incentives are necessary to boost foreign exchange earnings and the government needs to resume overseas promotions and marketing to boost inbound numbers,” he added. Rajiv Mehra, general secretary, FAITH said the industry was expecting a clear budgetary allocation for international tourism promotions which appears to have been missed. “Strengthening India’s visibility in global markets and measures for soft branding are critical to accelerating inbound tourism,” he added.

Continued focus on regional connectivity and destination development along with an emphasis on skilling and the creation of a national digital repository for destinations will help improve destination discovery and enhance the overall traveller experience, said Rajesh Magow, chair, FICCI tourism committee and co-founder and group CEO of MakeMyTrip. While measures such as rationalisation of TCS, and the development of seven high speed rail corridors were welcome moves, a higher marketing outlay towards promoting Incredible India could have delivered a powerful ‘double barrel impact’ by complementing infrastructure development with stronger global visibility, said Mahesh Iyer, MD and CEO of Thomas Cook (India).

Kachru said comprehensive infrastructure recognition, a long standing demand of the sector remains unmet. “We look forward to engaging in post budget discussions on sector specific policies including marketing India overseas that can translate this intent into tangible outcomes,” he added.

Mahesh Iyer, MD and CEO of Thomas Cook (India) said while the simplified flat 2% TCS on overseas tour programme packages was a welcome move, a higher marketing outlay towards promoting Incredible India could have delivered a "powerful double-barrel impact by complementing infrastructure development with stronger global visibility.”