Budget 2026 doubles down on infrastructure, affordability to power travel and tourism

The Union Budget 2026 has reinforced the government’s push to position travel and tourism as a long-term driver of jobs, regional development and economic growth, with a clear emphasis on infrastructure, connectivity and affordability across domestic and international travel.

Industry executives said the continued focus on roads, railways, airports and emerging modes of connectivity such as seaplanes is expected to make travel easier and more evenly distributed across regions, supporting the next phase of domestic and inbound tourism growth. Improved access, they noted, will also encourage travellers to explore newer destinations beyond traditional hotspots.

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Manjari Singhal, chief growth and business officer at Cleartrip, said the Budget signals a “clear and consistent commitment” to strengthening India’s travel ecosystem. As access improves, she noted, travellers are becoming more confident about exploring new regions, supporting both domestic and inbound tourism growth.

Infrastructure, affordability and skilling in focus

“Continued investments in building an integrated network of roads, railways, airports and emerging connectivity like seaplanes will make travel easier, more accessible and better distributed,” said  Singhal, adding that improved access would encourage travellers to explore new regions and experiences.

Infrastructure-led growth remains central to the government’s strategy. The budget increases allocations for transport networks, including a 14% rise in spending on new railway lines in FY27 compared with FY26, alongside a 10% increase in budgetary allocation for highway infrastructure. Seven high-speed rail corridors have been identified as “growth connectors”, with a specific focus on meeting rising travel demand to cities such as Varanasi.

Calling these measures encouraging for the sector, Aloke Bajpai, group CEO of ixigo, said the emphasis on rail and road connectivity aligns well with growing domestic travel demand. “The increased emphasis on rail and road infrastructure is a strong signal for the travel industry, particularly as demand expands beyond metro cities,” he said.

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Alongside large transport corridors, the budget has also prioritised smaller cities and pilgrimage centres. A Rs 5,000 crore allocation has been earmarked for the development of city economic regions (CERs), with a focus on tier-II and tier-III cities, including temple towns. Bajpai noted that this could “result in a big boost for tourism” in these markets, where demand has been steadily rising.

Measures aimed at making international travel more affordable have also drawn a positive response. The government has proposed a flat 2% tax collected at source (TCS) on overseas tour packages, replacing the earlier slab-based structure of 5% and 20%. Rajesh Magow, co-founder and group CEO of MakeMyTrip, said the move would ease pressure on travellers. “The rationalisation of TCS on overseas tour packages is a welcome step that addresses the upfront liquidity impact on Indian outbound travellers,” he said.

In addition, proposed revisions to international baggage clearance processes are expected to reduce dwell time at airports, improving the experience for inbound tourists. According to Rajnish Kumar, group co-CEO, ixigo, “The proposed revision of international baggage clearance processes to simplify procedures and reduce dwell time will help deliver a smoother and faster airport experience for inbound travellers.”

The budget also places renewed emphasis on destination development and skilling. Plans to set up a National Institute of Hospitality and strengthen the Council for Hotel Management “will help improve service quality and enhance India’s position as a global tourist destination,” added Kumar.

In accordance, Nikhil Sharma, managing director and COO, South Asia, Radisson Hotel Group, said, The hospitality industry has been reinforcing its talent pipelines through structured training programmes, partnerships with hospitality institutes, and focused efforts to build local capabilities.

Spiritual, regional and nature tourism gather pace

Sustainable and experience-led tourism features prominently, with proposals to develop ecologically sensitive trekking and hiking trails across mountain and forest regions. Nature-based tourism, experts said, is seeing growing interest from younger travellers, particularly millennials and Gen Z, who are increasingly driving leisure travel within India.

The Northeast and spiritual tourism have received a further boost through continued investments in Buddhist circuits across states including Sikkim, Manipur, Assam, Arunachal Pradesh, Mizoram and Tripura. Companies tracking travel demand said interest in the region has been rising, aided by improved connectivity and growing visibility through digital and OTT platforms.

“The focus on sustainable and experiential tourism, including the development of Himalayan trails, the continued push for Buddhist circuits, and the strong policy thrust on the Northeast, will support the growth of diverse tourism segments while enabling more balanced regional development. These measures are expected to encourage longer stays, wider travel dispersal, and stronger demand for quality accommodation and services across tier-2 and tier-3 markets,” said Sharma.

During the Maha Kumbh 2025, Prayagraj recorded nearly a tenfold year-on-year jump in hotel bookings, alongside a 65% rise in flight bookings and threefold growth in hotel searches. Demand also spilled over into nearby destinations. Established spiritual centres such as Udupi and Tirupati saw a 27% increase in visitors, while Amritsar recorded a 33% rise. This aligns well with the government’s focus on spiritual, cultural and heritage tourism.