Setting the Stage for Budget 2026
India’s travel economy is growing quickly, and much of that momentum is being driven by consumers and businesses. But once a year, the Union Budget becomes a meaningful inflection point: a moment where the government can either add tailwinds to this growth through sensible reforms, or unintentionally add friction through taxes, charges, and compliance. That’s why the industry watches Budget season closely not for announcements, but for signals.
Budget 2025-26 made early moves destination development, visa streamlining, and initiatives such as “Heal in India.” Budget 2026 is where the industry is asking for structural upgrades: policy that makes India easier to enter, easier to transact with, and cheaper to scale across skies and stays.
The Call in Inbound: Ease Visas for More Visits
Inbound leaders are blunt: visa policy is demand creation. Rishabh Doshi (Classic Holidays) argues that visa fee reduction + simpler entry can shift consideration at scale, especially when benchmarked against competing Asian destinations:
“Visa policy often determines whether a traveler even considers India in the first place. Easing visa costs and entry requirements benchmarked against competitive destination peers is a simple but powerful demand catalyst.”
The second-order ask is equally important: sustained Ministry of Tourism digital marketing capacity and a year-long roadmap co-created with industry so demand doesn’t spike in campaigns and fade after.
Unlocking Liquidity and Removing Friction
Varun Sarda, Co-Founder of DMC Bazaar highlights a structural tax issue that dampens demand:
“The biggest growth killer is the way TCS on outbound travel is structured today. Treating leisure and business travel spends like discretionary luxury purchases misunderstands how travel actually works. Locking working capital and unnecessary documentation at the point of booking slows agents, corporates, and even consumers.”
Under revised rules effective April 1, 2025, many categories (including overseas tour packages) can attract 20% TCS above ₹10 lakh, creating working-capital lock-ups and paperwork at the point of booking.
The core argument here is that outbound demand rarely collapses from intent — it slows because friction piles up across booking, payments, and compliance. The policy ask is to treat travel as enabling economic activity, not as a luxury-tax base.
More Incentives for International: The Aviation Voice
Airline leaders want Budget 2026 to back India’s “global carrier” ambition with three practical levers:
Bring ATF under GST (or reduce fuel tax distortion)
Lower airport user charges / rethink fee structures
Make leasing + MRO economics globally competitive
The context is currency. The rupee’s move has pushed USD-linked cost lines (fuel, leases, spares) higher; the Economic Survey cited ~6.5% depreciation from April 1, 2025 to Jan 22, 2026. With airline margins typically in low single digits, that cost pressure is difficult to absorb without systemic levers.
Beds, Bills, and Bottlenecks: Hospitality’s Push for Policy Parity
Hospitality leaders say Budget 2026 must shift from promotion to enabling capital and execution. Their foremost ask is nationwide infrastructure status for hotels, which would unlock long‑term, lower‑cost financing especially critical for expansion in Tier‑II and Tier‑III cities where demand is rising faster than supply.
Tax reform is the next pressure point. The industry is pushing for GST rationalisation on room tariffs and restoration of Input Tax Credit, arguing that current structures inflate costs, limit pricing flexibility, and hurt profitability at scale.
Expectations from sustainability and skills development feature too: incentives for green and energy‑efficient hotels, support for AI‑driven operations, and more industry‑aligned skilling programmes to address workforce shortages.
With the sector targeting 10–11% CAGR over the next decade, the message is clear: growth will depend less on demand generation and more on capital access, policy clarity, and execution speed.
Bottom Line
From skies to stays, India’s travel ecosystem wants clarity, capital, and coordination. Budget 2026 is its chance to go from growing fast to growing smart.
It's time for the Quest of the Day!
If you had one proposal for the Finance Minister to unlock India’s travel competitiveness, what would it be?