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