India's travel, tourism and hospitality sector is positioning Union Budget 2026 as a critical opportunity for structural reforms that could transform the industry from a service-based sector to a key infrastructure and growth driver. Industry stakeholders across various segments are seeking comprehensive policy support to sustain growth momentum and address existing fiscal and regulatory gaps.

Key Sector Demands and Reform Expectations

The tourism industry's primary expectations center around three core areas: simplified GST procedures, enhanced financing models, and policy support for new ownership structures. According to Vishal Suri, MD and CEO of SOTC Travel, the budget presents an opportunity to strengthen India's tourism foundations and accelerate growth through strategic reforms.

Abhishek Sahai, General Manager of Conrad Pune, emphasized that reducing indirect taxes would increase affordability, boost global competitiveness, and encourage tourism growth.

GST and Tax Structure Overhaul

SOTC's Suri outlined specific GST procedural reforms needed after GST 2.0 implementation. The recommendations include implementing centralized registration options, seamless single returns across all states, and procedural simplification to achieve a truly 'Good and Simple Tax' system.

A significant proposal involves replacing the complex multi-tier TCS structure with high tax rates of 5% and 20% with a universal 1% rate. This approach aims to ensure clear audit trails while avoiding unnecessary cash and liquidity blockage for travelers.

Wilfred Selvaraj, MD of LGT Holidays, highlighted how the current tax framework challenges organized travel players, noting that high GST on tour packages and 20% TCS on overseas programs have materially increased travel costs for consumers.

Infrastructure Development and Connectivity Focus

Stakeholders emphasized infrastructure-led growth as crucial for unlocking the sector's potential. Mahesh Iyer, MD and CEO of Thomas Cook (India), called for investments in infrastructure across under-served regions, spiritual destinations, and Tier II/III cities, combined with single-window clearance systems for hospitality projects.

Govind Gaur, CEO of WanderOn, underscored that domestic tourism can become the backbone of India's tourism landscape if the government focuses on increased infrastructural connectivity, airport expansion, and improved rail travel.

Industry Status and Economic Impact

The sector's economic significance is substantial, contributing 7-8% to India's GDP according to Nikhil Sharma, MD and COO, South Asia of Radisson Hotel Group. Shwetank Singh, Executive Director of Chalet Hotels, noted that the hospitality sector has created 46.50 million jobs and is projected to support 64 million by 2035.

Despite this economic contribution, the industry lacks infrastructure classification, which Singh identified as a constraint on scale. The demand for industry status recognition aims to unlock financing potential and facilitate growth acceleration.

International Tourism and Marketing Initiatives

Ravi Gosain, President of the Indian Association of Tour Operators (IATO), highlighted the great potential for inbound tourism but emphasized the need for focused financial support. He proposed establishing an "India Tourism Promotion Board" dedicated to promoting India internationally, with adequate funding for worldwide promotion.

Key international tourism support measures include:

• Enhanced allocation for global marketing campaigns like Incredible India
• Rationalized GST for tourism services
• Improved e-visa facilities and processing
• Increased benefits for international air connectivity to Tier-2 and Tier-3 destinations

Skills Development and Employment Generation

Jyoti Mayal, Chairperson of Tourism and Hospitality Skill Council, expects the government to prioritize long-pending skilling reforms. The proposed initiatives include industry-aligned curriculum, modernized training with digital and AI-integrated modules, regional hospitality skill centers, and streamlined apprenticeship pathways.

Dinesh Yadav, Founder and MD of Fine Acers, noted that with the industry expanding at a projected 10-11% CAGR, it requires a complete policy overhaul rather than short-term remedies to maintain growth momentum. The comprehensive reform approach could help India achieve the pathway to $1 trillion contribution to GDP from the tourism sector.

Finance Minister Nirmala Sitharaman is set to present the Union Budget 2026 in Parliament on February 1, with just one week remaining until the crucial economic announcement. Industry stakeholders across sectors are closely watching for government plans that will shape India's economic trajectory, with the fintech ecosystem particularly focused on policy measures that can accelerate digital financial services growth.

India's digital payments landscape has undergone a remarkable transformation, evolving from a convenience feature to a standard expectation across various sectors including local commerce, transportation, healthcare, and education. This surge has been driven by UPI's cost-effective and interoperable framework, increased smartphone penetration, affordable internet access, and a regulatory environment that adapts to innovation. These combined factors have fostered trust, promoted economic formalization, and facilitated substantial growth within the digital payments ecosystem.

Industry Expectations for Targeted Budget Measures

Naren Agarwal, CEO of Wealth1, advocates for specific budget measures that can significantly boost the fintech sector. His recommendations focus on multiple areas of support:

Agarwal emphasizes that policy support for artificial intelligence, data analytics, cybersecurity, and regulatory sandboxes will enable fintechs to scale responsibly while deepening financial inclusion and reinforcing India's position as a global hub for digital financial services.

Policy Continuity and Long-term Sustainability Focus

Richika Dadheech, Founder & Managing Director of FiatPe, highlights the industry's desire for policy continuity with enhanced focus on long-term sustainability. While acknowledging that zero MDR has been instrumental in accelerating adoption and inclusion, Dadheech suggests that differentiated economics for high-volume use cases could support continued infrastructure investment, security enhancements, and reliability improvements without negatively impacting smaller merchants.

As transaction volumes continue rising, reinforcing payment resilience, cybersecurity, and fraud prevention becomes increasingly critical. Dadheech notes that technology, particularly artificial intelligence, is transforming fintech operations by enabling real-time fraud detection, system monitoring, and operational efficiency at scale. The next phase of fintech growth will be characterized not just by reach or speed, but by ground-level reliability and user confidence in support systems.

Four Core Expectations for Fintech Ecosystem Enhancement

Rohith Reji, Co-Founder & CEO of Neokred, positions India at a crucial juncture where the "India Stack" could transition from a foundation to a global benchmark. His four key expectations include:

Strengthening Embedded Finance Infrastructure

Building on the government's Digital Public Infrastructure achievements, the expectation for 2026 centers on policies that further democratize banking-as-a-service. Tax incentives for startups developing indigenous middleware would enable even the smallest non-banking entities to offer sophisticated financial products, effectively decentralizing credit and payments systems.

Bridging MSME Credit Gaps Through Account Aggregator Framework

MSMEs represent an essential component of India's economy, yet credit access gaps persist. The proposed solution involves mandates that provide subsidies for integrating the Account Aggregator framework across all financial touchpoints, making data-backed lending the standard approach.

Regulatory Clarity and Operational Efficiency

Expansion of regulatory sandboxes with focus on "green fintech" and AI-driven compliance can significantly improve operational conditions. A simplified GST structure for fintech service providers would enhance operational efficiency and encourage cross-border collaborations, supporting the sector's growth ambitions.

Financial Literacy and Security Incentives

As fintech companies scale operations, security becomes paramount. The proposal includes establishing a dedicated fund for cybersecurity research and development, coupled with digital literacy programs. This approach ensures that the "next 500 million" users entering the formal economy do so with confidence and safety, supporting sustainable ecosystem growth.