As the anticipation builds for the Union Budget 2024 to be presented by the Union Finance Minister Nirmala Sitharaman on July 23, the Indian travel & tourism industry stakeholders are keen on budgetary measures that would enhance infrastructure, promote sustainable tourism, and boost India’s profile on the global tourism map.
This will also be the first budget of the new Narendra Modi-government following the Lok Sabha elections, and the nation awaits with bated breath. Expectations are high that Sitharaman may introduce income tax reliefs to increase disposable income for the common man. The Modi government’s focus is expected to remain on capital expenditure, infrastructure development, and GDP growth.
Amidst these priorities, the travel and tourism sector looks forward to pivotal announcements that could further elevate India’s standing as a premier global travel destination. As the Union Budget 2024 approaches, the travel and tourism sector remains optimistic about strategic investments and initiatives that could propel India into becoming a leading global travel destination, further enriching its economy and cultural heritage.
India’s domestic travel market is the sixth largest in the world by spending, contributing 5.8 percent to the national economy. With aspirations to reach USD 1 trillion by 2047, the tourism industry serves as a crucial driver of economic growth, supporting allied sectors such as hospitality and transportation while generating employment and foreign exchange earnings.
Outlook for Union Budget FY 2024
Moody’s rates India’s economic growth forecast for 2024 at 6.8 percent and 6.5 percent for 2025. The increasing domestic and international demand positively impacts GDP growth in emerging markets, with variations by country. The World Travel & Tourism Council (WTTC) 2024 projects that Travel & Tourism will contribute almost INR 21.15 trillion to the India’s GDP in 2024, a marked 21 per cent above 2019 levels. With jobs predicted to increase by 2.45Mn this year, this represents one in every 11 jobs in the Country.
To achieve the target of ‘Viksit Bharat by 2047,’ the Union Budget will need to focus on infrastructure development to attract investments, job creation, and reduction in logistics costs, thereby enhancing the ease of doing business in India.
Additionally, the government might present a vision for the fiscal roadmap up to FY30, aligning with the 2030 climate targets and supporting the transition phase over the next few years.
Need for Inbound tourism incentive scheme
Madhavan Menon, Executive Chairman of Thomas Cook India, which includes Thomas Cook, SOTC, Sterling Holidays, and TCI, called for better cooperation between tourism authorities and stakeholders. He emphasised the need for new airports through private investment, rapid expansion in railways, roads, and waterways, and focusing on high-demand areas like religious circuits and lesser-known destinations like Lakshadweep.
Menon also mentioned reviving the inbound tourism incentive scheme for select spots. He pushed for reforms in the tax collection at source (TCS), asking for a reduction to 1 per cwnt or at least a standard rate of 5 per cent for foreign travel packages. This would be simpler than the current 5 per cent and 20 per cent slabs. Additionally, he stressed the need for clarity on TCS for forex card payments to avoid confusion.
Tax relief and policy corrections
Rajesh Magow, Co-Founder & Group CEO, MakeMyTrip while sharing his budget wish-list said that strategic investments in the travel & tourism sector can unlock economic opportunities, boost employment, and enhance the competitiveness of India’s tourism landscape. He added that addressing the challenge of overcrowding in popular destinations requires innovative and sustainable solutions, and the Finance Minister in her Budget presentation could encourage corporations to invest their CSR funds in developing and improving tourist destinations. He also requested to allow TCS credit under Section 206C(1G) to be used against salary income tax, thereby providing necessary relief to taxpayers.
“Online travel agents (OTAs) in India are struggling with the challenging requirement of obtaining state-wise GST registrations. The current regulation compels OTAs to establish a physical presence in each state even when it is not required, leading to high administrative costs. Allowing OTAs to register in State(s) through their central head office would significantly alleviate these burdens, streamline operations, and enhance efficiency. Furthermore, this requirement puts national OTAs at a disadvantage compared to international competitors who are not subjected to similar regulations,” Magow mentioned expection urgent attention.
The Maharashtra Cabinet had recently approved a comprehensive tourism policy for 2024, which aims to attract Rs 1,00,000 crore in investment and generate 18 lakh jobs over the next decade.The policy identifies key areas to boost tourism’s contribution to Maharashtra’s goal of becoming a USD 1 trillion economy by 2028.It focuses on developing robust infrastructure and partnering with various stakeholders, including tour operators and MICE (meetings, incentives, conference, events) organizers, to double revenue generation in their respective sectors.
Focus on developing infrastructure & connectivity
Nishant Pitti, CEO & Co-Founder, EaseMyTrip said the interim budget of February 2024 had already set a positive roadmap, with substantial increases in budgetary allocations for the tourism ministry, highlighting a clear focus on enhancing tourism infrastructure. These initiatives are expected to stimulate local economies and attract both domestic and international tourists.
“The new budget is expected to build on these foundations, ensuring sustained progress and positioning India as a premier global tourist destination. While there were some reductions in overseas promotion budgets, the focus on developing infrastructure and connectivity is anticipated to have a long-term positive impact,” he mentioned.
Industry status remains the vital demand
Sharing his expectations for the hospitality industry, Kush Kapoor, CEO, Roseate Hotels & Resorts said, “We request the government to announce industry status for hotels and lower the GST rate from 18 per cent to 12 per cent, bringing it in line with international standards for the tourism industry. The much needed industry status will enable much easier access to cheaper loans for expansion and development. There should be a provision for single window clearance for approvals, a long standing demand from the hotel industry. Government can also lease old properties such as Havelis and hotels for long term, to benefit tourism industry through Public Private Partnership (PPP) model.”
Advancements in travel technology & digital marketing
Shikhar Aggarwal, JMD, BLS International firmly believes that strategic government support is crucial to fully harnessing this potential. “We hope to see increased investment in infrastructure that enhances connectivity and accessibility, especially in emerging travel destinations. However, we stress the urgent need for fiscal incentives for sustainable tourism initiatives to encourage environmentally responsible practices and align growth with ecological stewardship. Incentives for digital transformation, including advancements in travel technology and digital marketing, can position our nation as a leader in smart tourism. We also advocate for measures that support the workforce, such as skill development programs and employment benefits, ensuring the industry remains robust and competitive,” he added.
Pan-India campaign like Dekho Apna Desh
Talking about promoting inbound tourism, Rama Mahendru, Country General Manager – India, Intrepid Travel said, ” The government must undertake a pan-India campaign like Dekho Apna Desh to educate the people to respect and care for our tourist places and destinations. Also, the government must create awareness about less-visited places for tourism purposes to reduce the excess burden of tourists at already popular places. The government must encourage initiatives like rewarding the businesses that are bringing in foreign money for the country and including incentives for the inbound tour operators under foreign trade policy demonstrating our dedication to international collaboration.”
Sustainable tourism a national priority
Amit Jaipuria, Founder and CEO, Postcard Travel Club’ sharing his expectations said, “Policy incentives for making tourism more sustainable should be put in place and the use of storytelling to showcase regions and cultures should be further emphasised. The government should also consult with the leading voices in sustainable tourism such as the Global Sustainable Tourism Council, Transformational Travel Council, The Long Run, and Rare India for infrastructure development that respects the environment and empowers local communities. The government can also subsidise tax and offer tax relief to properties following sustainable practices. This can create a conducive environment for more responsible properties to come up in India and promote inbound tourism.”
The Uttarakhand tourism department has nearly 5,000 registered homestays. This initiative aims to provide small homestay owners with an online medium for securing bookings. The department provides subsidies under the Deendayal Upadhyay Homestay Scheme to foster the development of homestays in the region. Owners also receive comprehensive training in various skills and services to elevate their customer service standards.
