With the Union Budget 2025 set to be unveiled on February 1, the hospitality and tourism sector is looking forward to policy measures that could unlock growth opportunities and address long-standing challenges. Industry leaders are calling for critical reforms, including infrastructure status for smaller hotel and convention projects, tax rationalization, and streamlined compliance frameworks.
The Federation of Hotel & Restaurant Associations of India (FHRAI), among the largest hospitality associations globally, has urged the government to extend infrastructure status to hotel and convention centre projects costing Rs 10 crore and above. At present, this designation is reserved for projects exceeding Rs 200 crore for hotels and Rs 300 crore for convention centres—a threshold that limits financial support for smaller players. Lowering the bar would facilitate easier access to credit and encourage greater investments, particularly in emerging tourism destinations.
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Another pressing demand is the simplification of licensing and approval processes. FHRAI is advocating for a single-window clearance system across state and central levels to cut through bureaucratic red tape. By reducing regulatory complexities, the sector expects to attract more domestic and international investors, strengthening India’s position as a global tourism hub.
"The travel and tourism industry anticipates that the Union Budget will address key challenges and foster sustained growth. Rationalizing GST rates for travel agents and introducing input tax credits can reduce operational costs and enhance market competitiveness. Simplifying compliance processes can further improve administrative efficiency for businesses. Emphasizing digitization and targeted skill development programs can empower travel agents to adapt to emerging industry trends.
Additionally, promoting domestic and inbound tourism through innovative awareness campaigns and eco-friendly initiatives can drive sustainable development and bolster the sector’s long-term potential," said Hussain Patel, Director TripJack, a B2B online travel platform that provides a portal for travel agents and distributors to book flights, hotels, and holiday packages for their clients.
Industry stakeholders also emphasize the need for a forward-looking approach integrating sustainability and digital transformation. "The hospitality industry, a key driver of India’s economic growth, is poised to expand, but it needs substantial support to overcome operational challenges. The upcoming budget must prioritize simplifying GST compliance to streamline operations and foster business growth across the sector.
Additionally, the introduction of mandatory sustainability practices, including energy-efficient construction and waste management, will help the industry become greener and more competitive. Tax incentives for renewable energy adoption in hotels and resorts would further reduce costs while promoting eco-friendly operations," said Vishal Puri, Co-Founder of Spalba, a SaaS-enabled marketplace simplifying event planning for enterprises.
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Furthermore, Puri highlighted the importance of digital transformation: "India must also prioritize the development of digital infrastructure to bridge existing gaps and drive growth. Digital twin technology, which creates virtual replicas of physical assets, offers a transformative opportunity for the hospitality and tourism industry. By incentivizing the adoption of digital twins for infrastructure management, hotel chains can optimize their operations, improve customer experiences, and enhance sustainability.
Beyond infrastructure and taxation, the industry is also urging the government to invest in skill development programs and digital initiatives to help businesses adapt to evolving market dynamics. A renewed focus on promoting domestic tourism through innovative campaigns and eco-friendly initiatives could provide additional momentum to the sector’s expansion.
With India aiming to become a $1-trillion tourism economy by 2047, stakeholders believe that Budget 2025 presents a pivotal opportunity to lay the foundation for sustainable and inclusive growth. By addressing regulatory bottlenecks, incentivizing green investments, and harnessing technology, the government can create an environment where the hospitality and tourism sector thrives.
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