Union Budget 2026–27: Focus on Tourism, Skills and Destination Development

Presenting the Union Budget 2026–27, Finance Minister Nirmala Sitharaman outlined a Yuva Shakti-driven roadmap anchored on economic growth, capacity building and inclusive development. From a hospitality and tourism perspective, the Budget places emphasis on skilling, infrastructure-led connectivity, destination creation and medical tourism, positioning travel and tourism as contributors to employment generation and regional development.

National Institute of Hospitality and Structured Upskilling of Tourist Guides

A key announcement for the hospitality sector is the proposal to establish a National Institute of Hospitality by upgrading the existing National Council for Hotel Management and Catering Technology. The institute will function as a bridge between academia, industry and government, aimed at strengthening hospitality education, improving training standards and enhancing industry readiness.

In addition, the Budget proposes a pilot scheme to upskill 10,000 tourist guides across 20 tourist sites through a standardized, high-quality 12-week training programme delivered in hybrid mode. The initiative will be implemented in collaboration with an Indian Institute of Management, with a focus on improving visitor experience and professionalising guide services at key destinations.

Tourism Destination Development in Purvodaya and North-East

To support regional tourism growth, the Budget proposes the creation of five tourism destinations across the five Purvodaya States. Additionally, a Scheme for Development of Buddhist Circuits has been announced for Arunachal Pradesh, Sikkim, Assam, Manipur, Mizoram and Tripura. The scheme will cover preservation of temples and monasteries, development of pilgrimage interpretation centres, improved connectivity and enhanced pilgrim amenities.

Medical and Wellness Tourism Push

Strengthening India’s position as a medical tourism hub, the Budget proposes support for States to establish five Regional Medical Hubs in partnership with the private sector. These integrated healthcare complexes will include medical, educational and research facilities, AYUSH centres, Medical Value Tourism Facilitation Centres, and infrastructure for diagnostics, post-care and rehabilitation.

Infrastructure, Connectivity and City Economic Regions

Public capital expenditure has been increased to ₹12.2 lakh crore in FY 2026–27, reinforcing the government’s infrastructure-led growth approach. As part of this push, seven high-speed rail corridors will be developed as growth connectors to promote environmentally sustainable passenger systems, improving inter-city travel and tourism mobility.

The Budget also proposes mapping and development of City Economic Regions (CERs), with an allocation of ₹5,000 crore per region over five years. These regions are expected to leverage agglomeration benefits, supporting urban growth, business travel, conventions and hospitality-led mixed-use developments.

Support for MSMEs, Ease of Doing Business and Logistics Reforms

Recognising MSMEs as a key engine of growth, the Budget proposes a ₹10,000 crore SME Growth Fund to create future champions. This initiative is relevant for small and mid-sized hotels, restaurants, travel companies and tourism startups seeking access to capital and opportunities for scale.

The Budget also outlines multiple trade facilitation measures, including a single interconnected digital window for cargo clearance approvals and a shift to an operator-centric customs warehousing framework with self-declarations, electronic tracking and risk-based audits. These reforms are expected to benefit hospitality supply chains, food and beverage imports and event logistics.

Travel and Passenger Experience Measures

To ease travel-related costs, the Budget reduces TCS on overseas tour programme packages to 2 percent, from the earlier 5 percent and 20 percent slabs. In addition, baggage clearance provisions are proposed to be revised to enhance duty-free allowances in line with present-day travel realities, improving the overall international travel experience.

Sustainability and Green Mobility

High-speed rail corridors and investments in sustainable transport systems underline the Budget’s emphasis on environmentally responsible mobility. Improved connectivity is expected to support tourism dispersal, short-haul travel and the growth of emerging destinations.

Overall Outlook

With a combination of skilling initiatives, destination-focused development, infrastructure expansion and targeted tax reliefs, the Union Budget 2026–27 sets the foundation for experience-led tourism growth. The measures signal long-term intent to strengthen India’s hospitality ecosystem while supporting employment, regional inclusion and improved visitor experiences.

With expectations rising ahead of Union Budget 2026, industry leaders across hospitality, travel and food services are collectively calling for policy measures that move beyond short-term relief and address structural challenges limiting sustainable growth. From destination development and connectivity to taxation reforms and easier access to capital, the sector believes the upcoming Budget can play a defining role in shaping India’s tourism trajectory.

Shruti Shibulal of Tamara Leisure Experiences highlighted the need for a more diversified tourism map, with greater emphasis on developing new destinations and strengthening regional connectivity through schemes such as UDAN. She stressed the importance of sustainable tourism frameworks, simplified visa processes for wellness-led travel, and deeper rural participation to ensure tourism growth translates into local employment and long-term economic value.

From the food services segment, Pranav Rungta of Nksha Restaurant drew attention to persistent financial pressures faced by operators. He underscored the need for GST relief, revival of SEIS benefits, improved access to SME financing and formal industry recognition for food services, which could collectively ease cash flow constraints and support organised growth in the sector.

Amrita Gupta of Manglam Group pointed to the steady rise in experiential, wedding and wellness travel, particularly in heritage-rich destinations such as Jaipur. She advocated for quality-led investments, green financing options and focused policy support for heritage cities, allowing tourism growth to align with sustainability and cultural preservation.

Dinesh Yadav of Fine Acers echoed long-standing demands from the hospitality industry, calling for infrastructure status, GST reforms, innovative financing models and single-window clearances. According to him, these measures are critical to reducing project costs, improving viability and sustaining expansion across both established and emerging destinations.

Highlighting the strength of domestic travel, Govind Gaur of WanderOn and Dr Vikas Katoch of Adotrip emphasised the importance of continued investment in infrastructure, GST rationalisation and easier access to credit. They also reiterated the need for sustained focus on sustainable and heritage tourism, which they see as key drivers of inclusive, long-term growth.

As Budget 2026 draws closer, the unified message from the industry is clear: targeted reforms, policy clarity and long-term vision will be essential to unlock the next phase of growth for India’s hospitality, travel and food services ecosystem

As the Union Budget 2026 approaches, India’s travel and hospitality sector is looking to policy support to consolidate the strong demand witnessed across domestic and international travel segments. While occupancies and travel intent remain healthy, industry leaders believe structural reforms are essential to ensure long-term, quality-led growth and global competitiveness.

The hospitality sector continues to benefit from experiential travel, destination weddings and wellness-led stays. However, industry stakeholders point out that high capital costs and limited access to long-term financing continue to put pressure on returns. Granting infrastructure status, offering tax incentives on capital expenditure and improving access to institutional credit are widely seen as critical steps to enable sustainable expansion across destinations.

Digital travel platforms and alternative accommodation providers are also playing an increasingly important role in shaping India’s tourism ecosystem. With demand rising for hotels, homestays and BnBs across Tier-II and Tier-III cities, the industry has reiterated the need for GST rationalisation, especially in the mid-scale segment, to keep travel affordable and ensure price consistency. Support for integrated digital booking platforms and skill development across tourism services is expected to improve transparency and enhance the overall traveller experience.

Outbound travel remains a key focus area ahead of the Budget, particularly as luxury and experiential travel from India gains momentum. Louis D’Souza, Managing Partner, Tamarind Global, says, “As luxury and experiential travel from India continues to gain momentum, the Union Budget can play a pivotal role in shaping both outbound and inbound travel sentiment. On the outbound side, high-spending Indian travellers are increasingly investing in curated, design-led experiences, but policies around TCS and forex costs continue to influence booking timelines and destination choices. Easing these financial frictions would boost travel confidence and encourage travellers to upgrade experiences rather than compromise on quality.”

He further adds, “Equally important is the opportunity to strengthen India's inbound tourism narrative. With global travellers seeking authentic, immersive journeys, India's rich cultural heritage, wellness offerings, luxury hospitality, and emerging experiential circuits are uniquely positioned to attract high-value inbound travellers. Strategic budgetary support for destination marketing, infrastructure upgrades, simplified visa processes, and enhanced connectivity can significantly elevate India's appeal as a premium travel destination.”

Long-haul leisure and island destinations are particularly sensitive to outbound travel costs. Leena Jhugroo, Managing Director, Travel Lounge Leisure & Tours Ltd., notes, “As India's outbound travel market matures, the Union Budget presents an opportunity to unlock sustained long-haul leisure growth. A key expectation from the industry is rationalisation of TCS on overseas tour packages and forex spends, which continues to impact travel affordability and decision-making for Indian consumers.”

She adds, “For island destinations like Mauritius, which are positioned around romance, luxury, wellness, and MICE, easing outbound travel costs would significantly boost bookings. Improved forex policies and incentives for international travel-linked services would further encourage longer stays and higher spends.”

Neighbouring destinations are also closely watching India’s policy direction. Highlighting Sri Lanka’s strong reliance on Indian travellers, Charith DeAlwis, CEO, Unique Lanka Travels, says, “India continues to be one of the most important and consistent source markets for Sri Lanka, driven by strong cultural ties, short travel time, and a growing appetite for nearby international destinations.”

He further states, “As the travel ecosystem evolves, policies that enhance ease of travel, cost transparency, and regional connectivity can play a meaningful role in encouraging more frequent visits and longer stays.”

Within the premium segment, luxury travel operators stress the importance of addressing cost inefficiencies to sustain aspirational demand. Mir Musa Baghirzade, Sales Director, Turalux, says, “The Union Budget is closely watched by the luxury travel sector, as policy decisions directly influence discretionary spending and travel intent. Indian travellers today are aspirational, well-informed, and willing to invest in unique global experiences, but cost inefficiencies, such as high TCS on outbound travel can act as friction points.”

He adds, “Additionally, continued emphasis on digital payments, ease of global banking, and improved forex accessibility would enhance the overall booking experience. Luxury travel is no longer limited to leisure alone; it now extends to wellness retreats, destination celebrations, and immersive experiential escapes.”

Across segments, industry leaders have also called for stronger focus on manpower development, improved aviation connectivity and expansion of air networks to unlock new travel corridors. As the sector enters 2026 with cautious optimism, stakeholders agree that a forward-looking Budget balancing domestic, outbound and inbound tourism priorities could play a defining role in shaping India’s travel growth story