India is on the anvil of the Union Budget 2026– 2027. An annual exercise, a good budget is not merely a statement of revenue and expenses for the financial year but a reflection of the country’s aspirations, vision, goals and its socio-economic and trade policies. India Vision 2047 is that of a Viksit Bharat founded on “Atmanirbharta” .
Sectoral Expectations from the Budget
Every Sector awaits the budget announcements with expectation, keenly watches the pre-budget developments and reinforces its posturing with the government for policy-driven growth to drive competitiveness and sustainability. The Hotel Association of India is the national body for hotels and represents the organized, professional and branded hotels – business or leisure across star categories. Contrary to the accepted belief that the sector is elite, hotels are the providers of essential tourist infrastructure. In addition, the sector has deep linkages to employment generation, regional development, and foreign exchange earnings. The ability of hotels to create jobs – both direct and indirect, generate employment across all skill levels and for women and specially abled makes them a significant engine of inclusive economic growth.
Post-Covid Recovery and Growth Momentum
Post Covid, the sector has demonstrated a strong recovery momentum supported by a fast-growing economy, rising international and domestic travel, improved air and road connectivity, expansion of regional airports, and increased frequency of train and flight services to leisure destinations. Occupancy and room rates have strengthened across metros and tier II cities.
Tourism’s Role in India’s Economic Ambitions
As India looks to become the third largest economy by 2030 there is a huge expectation from the tourism sector. The percentage contribution of tourism to GDP and employment for India continues to be below the global average. Despite the diversity and richness of the country’s tourism offerings, we have more Indians travelling overseas than international arrivals into the country. The rapid expansion of hotels is critical to India tourism’s vision 2047 of contributing 10 percent to the GDP.
Creating a Level Playing Field Through Infrastructure and Fiscal Policy Support
Hotels are not looking at subsidies but merely seeking the due recognition that the sector deserves for its contributions and potential. Broadly the policy reforms that are imperative to add hotel rooms and maintain global standards are two. First is the according of infrastructure status, similar to other infrastructure sectors like railways, highways, ports etc. to enable hotels access softer funding for a business that requires huge capital investment and has a long gestation period. The other reform is at the level of States. Hotels should be allowed the same benefits as given to manufacturing and agriculture in terms of power tariffs’ property tax rates etc. These measures will drive investment in the sector by demonstrating a better ROI.
Under direct taxation, the significantly lower depreciation rate for hotel buildings compared to plant and machinery restricts reinvestment in modernization and weakens sector competitiveness; aligning these rates would support reinvestment. On the indirect tax front, GST-related issues continue to hamper growth, underscoring the need for tax restructuring. The denial of input tax credit for hotels with room tariffs below ₹7,500 has adversely impacted profitability and discouraged investment in budget and mid-scale hotels. Allowing ITC, periodically reviewing the threshold in line with inflation, delinking GST on food and beverage services from room tariffs, and clarifying IGST treatment for MICE activities are the essential tax re-structuring that will support the growth of the sector
Ease of Doing Business and Regulatory Reforms
Despite the significant progress in promoting ease of doing business, hotels still find it challenging. They are required to obtain nearly 70 licenses, approvals, and NoCs for construction and operations. The cost is high and the procedure is often time-consuming and cumbersome. A simpler, more competitive licensing regime with a single-window clearance will improve project viability. Delays in approvals impact timely execution of projects resulting in escalation of costs, creating pressure on ROI.
Incentivizing sustainable practices, facilitating adoption of technological advancements, and skilling are aspects that are of concern and of importance for all Sectors.
The SEIS incentives and rewards on foreign exchange earnings of hotels should be restored and hotels given the status of “deemed exports”. There is an urgent necessity of announcing a robust national tourism policy, creation of an empowered national tourism board A comprehensive marketing and promotion plan for Incredible India more so in the established and emerging source markets with close monitoring is required to ensure that the foreign tourist arrivals that are currently lagging behind the pre-covid levels. Development of new destinations, curating tourism experiences, creating convention hubs, and last-mile connectivity require attention and formulation of supportive policies.
Equally important will be the role of State Governments and Departments of Tourism in closely monitoring the on-ground execution of announced policies. Timely implementation, clear accountability, and coordinated action at the state level will be critical to ensure that budgetary and policy measures translate into tangible outcomes for investment, capacity creation, and quality growth across destinations. The concerned officials to be accountable for implementing tourism action plans. Transparency in notification and implementation of policies and rules is imperative and can be achieved by online faceless interventions.
Way Forward
In this period of Amrit Kaal, the time is opportune for the announcement of policies that tourism as an identified key pillar of the national economy requires to achieve the requisite growth momentum. We would like to see the Union Budget 2026-2027 build on the previous few budgets to accelerate growth, deepen domestic tourism, grow inbound tourism and MICE, attract sustained investment, particularly in hotels. With a growing economy, strong fundamentals stability, high percentage of domestic consumption in a turbulent rest of the world, India is well positioned to take bold initiatives in the sector and unleash its full potential as an engine of growth, employment and development and play a significant role in realizing the vision of our leaders of a developed nation as India completes 100 years of independence in 2047.
