Tourism Sector Set For Growth With Budget’s Focus On Infra, Connectivity

Regional aviation expansion through the UDAN scheme, coupled with new airport developments, will further integrate remote areas into the national economy. The hospitality sector is poised for growth, backed by increasing domestic consumption and inbound tourism

India's tourism sector is a significant economic multiplier and is becoming increasingly important as the country strives for rapid economic growth and employment creation. India is covered in beauty in all its nooks and corners. This nation's expansive landscape is decorated with the most diverse populations, cultures, and topographies. India also provides various geographical regions, world-class tourist attractions, and specialised travel services, including eco-tourism, heritage tourism, adventure tourism, and medical tourism.

The Union Government has presented a budget for inclusive development to accelerate growth. While there has not been any specific announcement for the real estate sector, the enhanced focus on UDAAN, which integrates smaller towns into the airline network and boosts tourism, will positively impact the hospitality sector. Streamlining the process and speeding up approvals for merger schemes and fast-track mergers will further benefit the industry’s consolidation.

Additionally, consistent overall policy framework aiming for an annual growth rate of 8 per cent, compared to the current rate below 6 per cent, is crucial for long-term success and achieving the targeted growth of the Indian economy. Additionally, the lowering of personal income tax will ensure higher disposable income, enabling tax payers to spend more on consumption, including buying homes.

KB Kachru, Chairman, Radisson Hotel Group South Asia & President – Hotel Association of India (HAI) said, “Budget is progressive, especially with its focus on tourism and job creation. The government’s commitment to developing 50 new destinations, and improving infrastructure, is promising. This year’s budget very well highlights the importance of promoting spiritual and medical tourism with neighbouring countries and simplifying visa processes to enhance international travel. Overall, the initiatives taken by the government in this year’s budget are the steps in the right direction for the industry.”

The Budget 2025-26 recognises and highlights the importance of tourism and hospitality as an engine of job creation and promoter of inclusive growth. An infusion of Rs 20,000 crore to increase tourism-led employment is going to help several states that house top tourist locations build infrastructure and boost connectivity. However, the onus has been put on states to acquire land to build hotels and other required facilities.

Aditya Sanghi, CEO of Hotelogix, says, “I welcome the government’s commitment to enhancing tourism across 50 destinations linked to Lord Buddha’s journey. The expected influx of visitors will spur the development of new hotels and infrastructure.”

He adds, “It will significantly support India’s growing religious tourism, which is set to generate a revenue of about 59 billion by 2028 and create 140 million temporary and permanent jobs by 2030. Also, the proposed streamlined e-visa system and Visa fee waiver for tourists from select countries will promote inbound tourism as the country is getting ready to host 3 per cent-5 per cent more foreign tourists in 2025 vs. last year.”

Jaideep Mirchandani, Group Chairman Sky One, said “The 2025 Budget announcements clearly outline the Government vision to invest in strengthening India’s aviation infrastructure and improving regional connectivity. In particular, the planned renovation of warehousing for air cargo in India, specifically for high-value horticulture fresh fruits, is an important contribution to achieving India’s logistics centric economy goal. The Streamlining of customs as well as cargo screening processes will certainly help to further increase effectiveness and minimize waiting periods and will positively impact businesses and end-users.”

With 120 target locations and an anticipated 4 crore passengers in his decade’s time, the amended UDAN scheme alongside new regional configurations, enhances the connectivity of the country beyond metros and will bring in a new wave of travel and connectivity. The new supporting helipads and new airports in the hilly and northeastern districts are sure to stimulate the economy of these unserved areas through trade, tourism and accessibility. The initiation of new greenfield airports in Bihar and the expansion of Patna’s airport indicates a much-needed comprehensive strategy for the development of aviation in the country.

The Economic Survey also brings forth the high level of activity that the aviation sector is experiencing as the Ministry of Civil Aviation makes use of 69 per cent of the earmarked capex for FY25 to the regions after the Ports and Shipping.

Most importantly, airport builders seem set to exceed the Rs 91,000 crore expenditure goal from FY20-FY25. Evidence of this expansion of the Indian footprint on air travel is in the fact that there are 619 operational routes with 88 airports under the successful UDAN scheme.

Another positive sentiment is that the cargo segment is also growing strongly, with the handling capacity expected to grow from 7.4 million metric tonnes for FY22 to 8 million MT for FY24. This is part of the growing requirement for air freight logistics and reaffirms India’s capability ambitions as a global logistics center.