Indian tourism is going through an ironic phase—foreign tourists have declined, while domestic tourism, including pilgrimage tourism, is on a roll. This year, we might see tourist numbers equalling the pre-COVID numbers from 2019, but will the budget finally open the promised door?
The promised door refers to industry status for the tourism industry, an ask that has been asked, and kept pending, for years. Every budget season, tourism industry stakeholders come out with the annual clamour, and while states like Maharashtra have proffered industry status, the union government hasn’t budged yet—some say it could be due to how tourism traverses sectors as varied as from aviation to construction.
Whatever, the call for industry status is only getting louder as we turn into the final lap of the union budget of 2025, but there are other pleas, too, mainly relating to GST.
“Allowing GST credit for hotel construction and rationalising GST rates will help reduce the overall cost of accommodation. These measures will further stimulate domestic tourism and positively impact inbound tourism,” said Rajesh Magow, co-founder and group CEO of MakeMyTrip.
“Besides, there are a couple of other operational and disparity-related GST issues faced by Online Travel Agents (OTAs),” he continued, “Mandatory state-wise GST registration with a physical presence in every state is adding to the administrative costs and management overhead unnecessarily. Since the nature of OTA business is online, if registration in different states can be allowed, using their central head office address will help streamline operations, reduce costs, and improve efficiency. Moreover, this requirement will help put Indian OTAs on a level playing field against international online players who are not bound by similar rules.”
“Similarly, there is an existing disparity in the GST charge for customers booking a non-AC bus through an online booking platform where customers are charged 5 per cent GST, while for direct bookings made with the bus operator, there is no GST charge,” Magow added.
Business body CII also called for targeted support for the tourism sector in what it believes is the crucial focus of this budget should be—job creation. “To stimulate job creation, targeted support to employment-intensive sectors such as tourism… is important, said Chandrajit Banerjee, director-general of CII.
The Incredible India campaign to attract foreign tourists was put on cold storage since the Modi government came into power, and while a Rs 33 crore allocation was given to it recently, more would need to be done if India is to match nearby countries like Thailand and UAE in tourist arrivals.
Medical tourism is also another area that needs a prop-up—post-Covid changes in trends and worsening of relations with Bangladesh and Maldives have seen a dip in foreigners coming in for specialised and cost-effective hospital treatments in India. Will the budget offer a boost in some way?
