What challenges does the tourism sector face without infrastructure status?

Without full infra status, hotels often face high borrowing costs, shorter loan tenors and tighter collateral norms, which make long gestation projects harder to finance. This slows expansion beyond metros, delays upgrade and makes it tougher for smaller and regional players to scale up capacity.

Can infrastructure status boost foreign tourism?

Yes, better funded hotel and tourism infrastructure can raise quality, capacity and consistency of service, making India more attractive for foreign tourists. Combined with improved connectivity, visa simplification and stronger global marketing, infra status can support higher foreign tourist arrivals over time.

How does the hospitality industry contribute to the economy?

Hospitality drives direct jobs in hotels and restaurants and indirect employment across transport, retail, handicrafts and local services around tourist hubs. It also attracts private investment into cities and smaller destinations, supporting regional development and adding to both domestic and foreign exchange earnings.

Why the Tourism & Hospitality sector wants infrastructure status in Union Budget 2026

As India’s travel and tourism ecosystem continues to recover and expand, the tourism and hospitality sector is once again looking to the Union Budget 2026 for policy support. One of the most persistent demands from the industry ahead of Union Budget 2026 is the grant of infrastructure status. Stakeholders believe that it could unlock long-term growth, improve financing access, and strengthen India’s global tourism competitiveness.

Role of tourism & hospitality in India’s economy

Tourism and hospitality play a significant role in India’s economy, contributing to:

Employment generation across skill levels
Foreign exchange earnings through inbound tourism
Growth of allied sectors such as aviation, transport, retail, and food services

The sector’s impact extends beyond hotels and travel services, supporting livelihoods in both urban centres and remote destinations. Given its multiplier effect, tourism is often seen as a key driver of inclusive economic growth.

Why it matters in Union Budget 2026

Union Budget 2026 comes at a time when the sector is seeking policy stability rather than short-term incentives. Industry stakeholders believe that recognising tourism and hospitality as infrastructure could align policy support with the sector’s long-term investment needs.

Union Budget 2025 already signalled intent by focusing on developing 50 world-class destinations with performance linked incentives homestay support and inclusion of hotels in those destinations. Stakeholders want this momentum to translate into pan India, structural support rather than project specific schemes only.

Key reasons it matters now:

Domestic tourism is growing fast, but capacity creation and upgradation are struggling with high capital costs and long payback periods.
Foreign tourist arrivals are improving but still not at full potential, partly due to infrastructure gaps, high costs and fragmented policy support.

Sector expectations from Union Budget 2026

Hotel chains, travel operators and industry associations are asking for a mix of tax and nontax measures that go beyond short-term relief. The central theme is to treat tourism and hospitality as a core economic infrastructure pillar, not just a discretionary services segment.

Ahead of Union Budget 2026, broad expectations include:

Easier access to long-term financing
Lower cost of capital for hotel and tourism projects
Policy measures that encourage private investment in tourism infrastructure
Nationwide infrastructure status for hotels and tourism projects, not limited only to select destinations.
Rationalisation of GST on hotel tariffs and restoration of full input tax credit to improve profitability and pricing power.
Higher budgetary allocations for destination development, branding, connectivity and skilling.

While fiscal constraints may limit large-scale announcements, stakeholders are watching closely for signals that reflect the government’s long-term intent toward the sector.

Sector demands ‘infrastructure status’

A key demand from industry bodies is the grant of infrastructure status to hotels and tourism projects. Pre Budget interactions highlight a consistent wish list across hotel owners, travel platforms and industry bodies.

Main demands:

Infrastructure status for hospitality in the harmonised master list, enabling access to longer tenure, lower cost loans and infrastructure focused financing channels.
Targeted tax incentives for new hotel projects, especially in Tier II/Tier III cities and heritage destinations.
GST rate rationalization for midmarket and budget hotels and restoration of seamless input tax credit to avoid tax cascades.

Why the sector wants infrastructure status?

This status could potentially:

Enable access to infrastructure financing norms
Improve lending terms and repayment tenures
Encourage institutional and long-term investors

Granting full infrastructure status would place hospitality on par with sectors like roads, ports and power in the financial ecosystem. Industry leaders say this can materially improve project viability and speed up expansion.

Why infrastructure status may be delayed

Granting infrastructure status has broader fiscal and regulatory implications. Some of the reasons it may be delayed include:

Concerns around widening the scope of infrastructure classification
Budgetary constraints and prioritisation across sectors
The need to balance long-term policy commitments with fiscal discipline
Fiscal and banking sector caution: extending infra benefits to a wide and heterogeneous set of hotels and tourism projects could strain credit quality if not carefully targeted.
Policy preference for gradualism: the government has started by including hotels in selected destinations in the infrastructure list, but they may assess impact before scaling it up at national level.

Despite repeated demands, full scale infrastructure status for the entire tourism and hospitality sector has not been granted India wide so far. There is also a view that states own policies, local clearances, land rules and GST decisions must align better before a blanket status can deliver its full benefits.

As a result, any move in this direction is likely to be gradual rather than immediate.The tourism and hospitality sector’s demand for infrastructure status reflects its capital-intensive nature and long investment cycles. While Union Budget 2026 may not deliver an immediate decision, industry stakeholders will be closely tracking policy signals that indicate the government’s long-term approach toward tourism-led growth. Even incremental steps could help improve confidence and investment sentiment in the sector.

Union Budget 2026: Key Demands from the Manufacturers

April 24, 2026 | 4 mins read

Ahead of Budget 2026, manufacturing expectations are centred on a familiar formula of lower input friction + predictable policy + incentives. It can improve global competitiveness especially when there are trade headwinds and tariff uncertainties growing before budget coverage. The manufacturing sector looking for policy continuity and targeted support to accelerate India’s journey towards becoming a global manufacturing hub. Industry leaders are keen that the Budget balances fiscal prudence with incentives that boost exports, and technology adoption across sectors.

Upcoming Union Budget Focus on Affordable Housing Sector

April 24, 2026 | 5 mins read

Learn about the significant allocations to the Pradhan Mantri Awas Yojana (PMAY), tax benefits, and public-private partnerships aimed at expanding access to affordable housing. Understand how these measures support the 'Housing for All' mission and present investment opportunities in the real estate sector. One of the first decisions that the Union Cabinet took after the new government took office in June 2024 was to approve a proposal to build 3 crore new houses under the Pradhan Mantri Awas Yojana (PMAY). This has set the tone for the full Union Budget 2024 in July, where the expectation is that there will be many measures take to promote affordable housing across India. This continues from the Interim Budget of 2024-25 ahead of the general elections when the Finance Minister Nirmala Sitharaman had reiterated the government’s commitment to addressing the need for affordable housing, a critical component of the government’s broader social welfare agenda. The focus continues to be on expanding access to housing for low and middle-income groups, promoting urban development, and driving economic growth through increased housing investments.

Budget 2026 direct tax playbook: no slab cuts, STT on F&O increases, but big rule changes you can’t ignore

February 27, 2026 | 9 mins read

Budget 2026 didn’t bring major changes to direct tax slabs, but it laid out a clear roadmap for future reforms. The government has left individual income tax slabs unchanged under both the old and new regimes. But it has quietly rewritten several rules that will impact how you file returns, trade in F&O, taxation on share buybacks, hold Sovereign Gold Bonds, and manage foreign remittances. For retail investors and salaried taxpayers, Union Budget 2026 shifts focus from rate cuts to cleaner compliance, tighten loopholes, and a push toward long-term, tax-efficient investing over speculation.

View All

FAQ

Hotels at select ‘top 50’ destinations were brought into the harmonised infrastructure master list after Budget 2025, giving them quasi infrastructure treatment. However, the industry is still lobbying for wider, pan India infrastructure status for hospitality projects across the country.