Union Budget 2026 Signals a New Growth Phase for India’s Travel Sector

Key Takeaways For Travel From Union Budget 2026

The Ministry of Finance, Government of India, released the Union Budget 2026-27, reaffirming the Indian travel and tourism sector as a strategic priority due to its potential to drive regional development, generate employment and boost foreign exchange earnings.

Building on last year’s groundwork, the budget marks a significant shift towards skill development, sustainability, heritage promotion, and regional tourism expansion. Zubin Karkaria, CEO of VFS Global, observed that the Union Budget charts a strong roadmap to Vision 2047, positioning tourism, mobility and human capital as engines of long-term growth. By recognising tourism as a catalyst for jobs, foreign exchange and regional development, the government is building a more competitive and resilient travel ecosystem. 

This vision is reflected in the Budget through concrete initiatives to improve connectivity, promote outbound travel, and develop regional tourism hubs, setting the stage for broader measures and impacts across the tourism sector.

Connectivity, Outbound Travel, and Regional Hubs

While last year’s Union Budget 2025 focused on expanding regional air connectivity through the modified UDAN scheme, the 2026 Budget builds on this foundation with several new initiatives. 

Aditya Pande, Group Chief Executive Officer, InterGlobe Enterprises, noted that these measures will boost demand, support local economies, and strengthen India’s position as a global hub for high-quality hospitality and travel.

This year, the union government has also reduced the Tax Deducted at Source (TDS) on overseas tour packages to a flat 2 per cent under the Liberalised Remittance Scheme (LRS), making international travel more affordable.

Travel companies and leading industry players have welcomed, in particular, the measures announced in the Union Budget 2026–27, particularly those aimed at easing outbound travel and improving operational efficiency. From an outbound travel perspective, the emphasis on technology-led governance and the reduction in TCS on overseas tour packages meaningfully improve affordability, transparency, and ease of travel for Indian consumers. This supports the rapid growth of India’s outbound market while enabling travel companies to design more personalised, seamless experiences, according to Hari Ganapathy, Co-Founder, Pickyourtrail.

A similar sentiment runs across the outbound ecosystem. The Union Budget 2026 takes a constructive step towards addressing some long-standing operational challenges faced by outbound travel businesses. The reduction of TCS on overseas tour packages to 2% is a welcome move. It will ease immediate cash flow pressure for both travellers and agents, particularly in high-volume, cross-border transactions, as Chirag Agarwal, Co-founder & CEO, TravClan, noted.

Alongside outbound reforms, infrastructure development remains central to the government’s broader tourism and mobility vision. The 2026–27 Budget announced the development of seven new high-speed rail corridors, including Mumbai-Pune, Pune-Hyderabad, Hyderabad-Bengaluru, Hyderabad-Chennai, Chennai-Bengaluru, Delhi-Varanasi and Varanasi-Siliguri. 

Together, these corridors will span nearly 4,000 km and are expected to attract investments of around Rs 16 lakh crore, improving connectivity between central and emerging cities and, in turn, supporting tourism growth through faster, more sustainable travel.

For inbound tourism, enhanced rail connectivity is expected to play a transformative role. Rail connectivity lies at the heart of this vision. Emphasis on high-speed rail corridors, along with proposed mountain and scenic train services, promises faster, more immersive journeys across India’s cultural, spiritual, and natural landscapes. These improvements encourage longer stays and richer itineraries for inbound visitors, as highlighted by Arun Kundu, Director, Inbound Travel & Luxury Train Business, Deccan Odyssey, Ebix Travels.

Beyond connectivity, the Budget also outlines the development of five regional tourism hubs in the Purvodaya states, Bihar, Jharkhand, West Bengal, Odisha and Andhra Pradesh, supported by eco-friendly e-buses and upgraded local infrastructure. With the Ministry of Tourism’s allocation for 2026–27 standing at approximately Rs 2,438 crore, the focus remains firmly on sustainable and regionally balanced tourism growth.

This regional approach is expected to unlock the next phase of domestic travel demand. By strategically mapping city economic regions around their inherent growth drivers and strengthening connectivity, India can unlock the travel potential of Tier-2 and Tier-3 cities. This will significantly boost experiential travel within the domestic sector, according to Govind Gaur, CEO, WanderOn.

The Budget’s emphasis on experience-led tourism and value creation has also resonated with industry experts. By curating 15 iconic archaeological sites and Buddhist circuits as immersive cultural hubs, the government is unlocking the high-yield potential of India’s civilizational assets. This isn't just about footfall; it's about value capture. The integration of a 'National Destination Digital Knowledge Grid' with tangible infrastructure, like the new Seaplane VGF scheme and sustainable trekking corridors, creates a premium ecosystem. We are moving towards an era where India’s 'Orange Economy' and heritage sectors become significant employment engines for local communities, according to Aalap Bansal, Partner, G&PS, Lead- Tourism, Sports and Leisure, KPMG in India.

From a mobility and infrastructure perspective, the Budget is also seen as a balanced, forward-looking roadmap. The Union Budget 2026–27 presents a balanced and forward-looking roadmap for strengthening India’s infrastructure-led growth while boosting mobility, tourism potential and service-sector employment, as outlined by Deepali DeV, Chief Operating Officer of ECOS (India) Mobility & Hospitality Limited.

A Holistic Approach To Tourism Development

Building on this foundation, the Union Budget 2026–27 sharpens its focus on tourism skill development, sustainability, heritage conservation and regional hubs. Key measures include upgrading the National Council for Hotel Management and Catering Technology into a National Institute of Hospitality and launching a pilot programme to train 10,000 tourist guides across 20 destinations through a standardised 12-week hybrid programme in collaboration with an Indian Institute of Management.

Industry leaders like Vishal Suri, Managing Director & CEO, SOTC Travel Limited, and Mahesh Iyer, Managing Director & Chief Executive Officer, Thomas Cook (India) Limited, have welcomed the emphasis on capacity building and workforce professionalisation. The pilot initiative is a strong step towards ensuring quality service delivery and enhancing India’s global competitiveness. Together, these measures strengthen the competitiveness of Indian tour operators, attract investment, and create new opportunities across the tourism value chain.

The government plans to develop ecologically sustainable mountain and trekking trails in Himachal Pradesh, Uttarakhand, and Jammu & Kashmir, as well as wildlife and turtle trails in coastal states. Heritage and archaeological sites are also prioritised, with 15 locations set to become public cultural tourism destinations with improved facilities.

Akansha Agarwal, Co-Founder & CMO, Int2Cruises, said, “Initiatives such as the enhancement of trekking and heritage trails highlight a clear commitment to improving domestic travel experiences.”

Gaurav Malik, Country Director, Indian Subcontinent & Indian Ocean Islands at Agoda and Aloke Bajpai, Group CEO, and Rajnish Kumar, Group Co-CEO, ixigo added that the emphasis on nature-based and experience-led tourism with plans to build ecologically sustainable trekking across key mountain and forest regions is particularly encouraging and is likely to give a meaningful boost to leisure travel within India, which Millennials and Gen Z are increasingly driving. 

Progress And Potential 

Leading travel and tourism representatives, including Rajiv Mehra, General Secretary of FAITH, Surendra Kumar Jaiswal, President of FHRAI, Jyoti Mayal, Chairperson of THSC and Subhash Goyal, Chairman, Indian Chamber of Commerce Aviation and Tourism Expert Committee acknowledged that the Budget demonstrates a clear intent to position tourism as a driver of socio-economic growth and to enhance India’s competitiveness globally.

However, Subhash Goyal also highlighted key areas of concern. He noted that tourism has not been granted Export Industry Status and incentives on foreign exchange earnings have not been reinstated. He also added that the allocation of funds for promoting India as a tourist destination remains low and largely ineffective, while the demand to restore MDA assistance for tour operators has been overlooked. 

Overall, while the leaders welcomed the Budget’s focus on tourism, they stressed that further steps are needed to strengthen India’s global competitiveness and fully realize the sector’s potential as a key contributor to the economy.