With the Union Budget 2026 scheduled for February 1, hospitality industry leaders have presented comprehensive policy recommendations aimed at sustaining growth and improving the sector's long-term competitiveness. The industry stands at what executives describe as a critical juncture, with strengthening demand across multiple segments including domestic travel, religious tourism, weddings, MICE, and medical travel.

Infrastructure Status Recognition

The primary demand from industry leaders centers on granting comprehensive infrastructure status to the hospitality sector. Nikhil Sharma, Managing Director and COO, South Asia, Radisson Hotel Group, emphasized that tourism and hospitality contribute nearly 7-8% to India's GDP and require policy frameworks that recognize hospitality as productive economic infrastructure.

"Granting infrastructure status to hospitality would unlock long-term financing, improve capital efficiency and accelerate quality development beyond metros," Sharma stated. He highlighted that such recognition would enable better access to funding and support expansion in tier-2 and tier-3 cities.

Shwetank Singh, Executive Director, Chalet Hotels Limited, noted the sector's employment contribution while pointing to existing gaps in policy support:

Singh explained that while the Union Budget 2025-26 extended infrastructure benefits to hotels in 50 select destinations, broader recognition remains necessary to enable softer financing, lower utility tariffs, and rationalized property taxes.

Tax Rationalization and Financial Reforms

Industry leaders have consistently called for GST rationalization and restoration of input tax credit to improve affordability and competitiveness. Harshal Dilwali, Director and CEO, Clarissa Group, emphasized the need for rationalized GST structures alongside easier access to affordable credit as critical factors for sustaining growth amid rising operating costs and compliance burdens.

K B Kachru, President of Hotel Association of India (HAI) and Chairman – South Asia, Radisson Hotel Group, outlined specific financial reforms needed:

• Full infrastructure status for hotels
• Simplification of approvals through single-window mechanism
• Reinstatement of incentives linked to foreign exchange earnings
• Higher depreciation allowances for hotel assets

Policy Coordination and Development Support

Singh called for stronger Centre-state coordination, suggesting that bringing tourism into the concurrent list could address fragmented policymaking and support holistic destination development. This structural change would enable more coordinated policy implementation across different levels of government.

The industry leaders also emphasized the importance of continued investment in connectivity aligned with tourism clusters, support for sustainable operations, and hospitality-focused skilling initiatives. Dilwali highlighted the need for stronger support for skill development, workforce formalization, and continued public investment in tourism infrastructure and last-mile connectivity to expand demand beyond major cities.

Budget Context

The Union Budget 2026, to be presented on February 1, will mark Finance Minister Nirmala Sitharaman's ninth consecutive Budget presentation. Industry leaders approach this Budget with measured optimism while acknowledging the structural constraints that continue to limit the sector's growth potential.

The hospitality sector's comprehensive demands reflect its significant contribution to GDP, employment generation, and foreign exchange earnings, positioning these policy reforms as essential for unlocking the industry's full economic potential in the coming years.

Union Finance Minister Nirmala Sitharaman conducted a comprehensive pre-Budget consultation meeting with States and Union Territories with legislatures in New Delhi, as part of the preparatory process for the Union Budget 2026-27. The high-level consultation brought together key state leadership and senior finance officials to discuss budgetary priorities and recommendations.

Key Participants and Attendance

The consultation meeting witnessed significant participation from state leadership across the country. Minister of State for Finance Pankaj Chaudhary joined the proceedings alongside Sitharaman.

Government Representation

The meeting included comprehensive representation from the Ministry of Finance, with Secretaries from three key departments participating in the consultation process:

• Department of Economic Affairs
• Department of Expenditure
• Department of Revenue

This multi-departmental approach ensures that various aspects of fiscal policy and budgetary considerations are adequately addressed during the consultation process.

Budget Timeline and Significance

The government has confirmed its commitment to presenting the Union Budget on February 1, maintaining the established timeline. The Union Budget for 2025 was presented on February 1, and the Budget for 2026 is scheduled for the same date.

The upcoming Budget presentation will mark a significant milestone for Sitharaman, as it will be her ninth consecutive Union Budget presentation, highlighting her sustained leadership in India's fiscal policy formulation.

Consultative Process Framework

These pre-Budget meetings represent a crucial component of the government's consultative approach to budget preparation. The sessions are designed to gather comprehensive views and suggestions from States and Union Territories, ensuring that regional perspectives and priorities are incorporated into the national budgetary framework. This collaborative approach strengthens the federal structure by providing states with a platform to contribute to national fiscal policy discussions.