Tourism industry seeks connectivity boost as Budget nears

Bengaluru: India, with its diverse geography and a young population backed by rising disposable incomes, holds significant untapped potential in travel and tourism. Reflecting this focus, the Union Budget for FY26 allocated Rs 2,541.06 crore to the sector, prioritising infrastructure creation, skill development and easier travel.

Key initiatives include developing 50 top tourist destinations, extending MUDRA loans for homestays, improving connectivity and expanding e-visa facilities.

As of January 2025, the Ministry of Tourism had sanctioned 52 projects under Swadesh Darshan 2.0, 36 under the Challenge-Based Destination Development (CBDD) scheme, and 40 large projects under the Special Assistance to States for Capital Investment (SASCI). The Indian Brand Equity Foundation said, “UDAN’s third round added 106 tourism routes, with 53 operational by January 31, 2025, and plans to connect 120 destinations serving 40 million passengers over the next decade.”

With demand rising, industry stakeholders expect the upcoming Budget to sharpen its focus on strengthening tourism infrastructure across air, rail and road transport.

Calling for improved air connectivity, ixigo Group CEO Aloke Bajpai said sustained policy attention over the past decade had widened access through airport expansion and regional connectivity. “The revamped UDAN programme has helped, but connectivity gaps remain and passenger aircraft capacity needs urgent expansion,” he said, adding that several revived regional airports continue to see limited operations due to commercial, operational and infrastructure constraints.

Rajnish Kumar, Group Co-CEO, ixigo, said the next growth phase must prioritise better utilisation of existing infrastructure. “We need to enable more regional airlines to serve underserved markets and strengthen regional routes,” he stated, adding that higher allocations for modernising terminals, expanding runways, upgrading security systems and increasing capacity at high-traffic airports would be “critical to easing current bottlenecks.”

High aviation turbine fuel (ATF) costs remain another key concern. Bajpai noted that although average ATF prices in FY25 fell about 8 per cent year-on-year to around Rs 95,181 per kl, “fuel still accounts for 30-40 per cent of airline operating costs”. Bringing ATF under GST, he said, “could stabilise prices, improve cost efficiency and make air travel more affordable”.

On railways, the industry called for adequate funding to support plans to double capacity at 48 stations by 2030, while also seeking GST parity for non-AC bus services sold online and offline.

AbhiBus COO Rohit Sharma said, “Budget 2026 is an opportunity to strengthen the backbone of domestic travel,” adding that the sector expects policy support to improve safety and reliability through wider adoption of advanced safety technologies and continued momentum for electric mobility.

Industry bodies and startups also reiterated the need to simplify ESOP taxation. Shikhar Aggarwal, Joint Managing Director, BLS International, said, “Measures to boost disposable incomes, introduce targeted travel incentives and review foreign exchange limits would encourage higher spending and support long-term growth of the tourism sector.”