Budget 2025 proposes significant investments in the tourism sector to develop the top 50 tourist destinations, modified UDAN scheme, and more.
In her Budget presentation for FY 2025-26, Finance Minister Nirmala Sitharaman has announced a series of measures to invigorate India’s tourism sector. Key initiatives include streamlining travel for international visitors, developing iconic tourist destinations, and promoting medical tourism through public-private partnerships. Further support will be provided through infrastructure project funding and Mudra loans for homestays, aiming to improve both connectivity and hospitality services.
Also, in a major boost, Ministry of Tourism’s budget allocation for the FY 2025-26 has been increased three times to Rs. 2541 crore, up from a mere Rs. 850 crore in FY 2024-25.
Visa waivers for foreign tourist groups
To attract more international tourists, the government will implement visa waivers for select tour groups. This simplified entry process will make India a more appealing destination, capitalizing on its rich cultural and natural heritage to increase tourism revenue.
Development of 50 major tourist sites
FM Sitharaman announced that the government will collaborate with states to develop 50 key tourist destinations nationwide in a ‘challenge mode’. This partnership will focus on upgrading infrastructure, amenities, and accessibility to world-class standards. “The state governments will be responsible for providing land to build essential infrastructure. To further boost tourism, hotels in the key destinations will be included in the harmonised infrastructure list, ensuring better access to financing and development support,” she said.
Continuing the government’s focus on the development of spiritual tourism, Sitharaman also announced initiatives for sites associated with Gautama Buddha’s life.
Mudra Loans to Support Homestays
In her budget speech, the Finance Minister also announced that to boost tourist accommodations, homestays will have access to Mudra loans. This funding will enable small, local businesses to upgrade their offerings, providing tourists with more comfortable and authentic experiences. The initiative will also promote tourism entrepreneurship and create jobs in both rural and urban areas.
Promotion of Medical Tourism
The “Heal in India” initiative will partner with private healthcare providers to promote India as a leading destination for medical tourism. India’s reputation for affordable, high-quality healthcare already attracts international patients. By streamlining visa processes and improving medical facilities, this initiative aims to solidify India’s position as a global medical and wellness hub.
Skill-development
She announced, “We will facilitate employment-led growth by organising intensive skill development programmes for our youth, including institutes of hospitality management.”
For giving ‘tourism’ due importance for its role in economic growth of the country and employment generation, Rajiv Mehra, President, Indian Association of tour Operators (IATO), said, thanked the FM for developing 50 Tourist Destinations to enhance India’s global standing as a premier tourist destination in partnership with state governments. He said, “This will include infrastructure development to improve the overall visitor experience. The focus will be on enhancing the appeal and accessibility of these locations to attract more visitors. Special focus on destinations associated with the Buddha Sector. These sites will be developed to promote spiritual tourism, aiming to attract both domestic and international visitors to elevate India’s status as a spiritual tourism hub.”
“To encourage local tourism, mudra loans will be available to homestay businesses; to promote medial tourism to attract foreign patients under ‘Heal-in-India”’ campaigns; to introduce funds-of-funds to support technological innovation and startups in the sector. There is also mention of adding new sector under Udaan Scheme and most important is Visa fee waivers and e-visa options that will be introduced for certain tourist groups to attract more visitors,” Mehra highlighted.
IATO President however rued that there is no mention of rationalization of taxes and giving export industry status to Tourism industry in the union budget, which is a long pending demand of IATO based on the foreign exchange earnings. These are old pending demands of IATO and Mehra is hopeful that these will be considered favourably by the GST Council.
Jyoti Mayal, Immediate Past President, Travel agents Association of India (TAAI), said, Developing 50 key tourism sites in partnership with states, along with granting infrastructure status to hotels in these destinations, is a progressive move that will boost investment, create jobs, and elevate the overall travel experience.”
Mayal also lauded the budget for, “The focus on medical tourism under the ‘Heal in India’ initiative, along with streamlined visa norms and private sector collaboration, is another strong push in positioning India as a global hub for wellness and healthcare tourism. Similarly, incentives such as MUDRA loans for homestays, performance-linked incentives for states, and e-visa fee waivers for select groups will support local businesses, enhance accessibility, and attract a wider spectrum of travelers.”
She however lamented, “Given the strides being made, it is a setback that critical concerns raised by travel service providers — such as restoring GST input credit, abolishing TCS, and granting industry status to tourism for tax benefits, have not been addressed. These measures are essential for improving ease of business, boosting liquidity, and ensuring the long-term sustainability of the sector.”
Furthermore, Mayal also said, “The ₹33 crore allocation for international tourism marketing, while a significant jump from last year’s ₹3 crore, still pales in comparison to the ₹177 crore allocated for domestic tourism promotion. If we truly want to position India as a premier global travel destination, we need a stronger push in international branding and outreach.”
According to Aditya Pande, Group Chief Executive Officer, InterGlobe Enterprises: “This budget outlines a compelling roadmap for a Viksit Bharat. The focus on boosting consumption through targeted tax relief for the middle class, coupled with the government’s commitment to streamlining tax procedures, will significantly improve ease of doing business and unlock further economic potential. At InterGlobe Enterprises, we are particularly encouraged by the strategic investments and vision for strengthening the holistic tourism ecosystem in the country, with the development of infrastructure and focus on skilled workforce. These initiatives lay a solid foundation for sustained economic progress and a brighter future for the country.”
Aviation: Modified UDAN scheme
UDAN has received government support for another 10 years with Finance Minister Sitharaman announcing in her Budget speech that it would be ‘modified’ so that 120 new destinations are launched to carry 4 crore passengers in the next 10 years. “The scheme has connected 88 airports and operationalised 619 routes. Inspired by that success, a modified UDAN scheme will be launched to enhance regional connectivity to 120 new destinations and carry 4 crore passengers in the next 10 years,” the FM said. Of the 619 routes, nearly 370 are currently active while the remaining have fallen into disuse.
Sitharaman reiterated that the scheme will also support helipads and smaller airports in hilly, aspirational, and north-eastern districts. However, the budget announcement did not provide any fresh allocation for UDAN.
UDAN, also known as the Regional Connectivity Scheme (RCS), saw its first flight take off on April 27, 2017 from Shimla to Delhi, with which the scheme was operationalised for 10 years. A sum of Rs 4,500 crore set aside for reviving unused and underused airports across the country. Later, Rs1,000 crore was allocated for the period from 2023 to 2026. It is reliably learnt that nearly Rs 4,500 crore out of the total Rs. 5,500 crore has been utilised so far.
Jyoti Mayal, Immediate Past President, Travel agents Association of India (TAAI), said, “The 2025 Union Budget lays a strong foundation for India’s travel and tourism industry, with some much-needed initiatives that will shape its future. Expanding the UDAN RCS scheme to 120 destinations and targeting 4 crore travellers is a crucial step in making regional connectivity more seamless, bringing previously overlooked destinations into the tourism mainstream.”
Commenting on the budget announcement, ixigo’s Group CEO, Aloke Bajpai, said, “We are pleased that the government will continue to prioritize the UDAN scheme to enhance regional air connectivity, benefiting travelers from Tier 2 and Tier 3 cities.Great to see focus on developing greenfield and brownfield airports in Bihar and expansion of Patna airport. For a population of 120+ million, we had only 3 operational airports there. The development of new airports is essential to meet the rising demand for air travel, support first-time flyers, and accommodate the region’s growing air traffic.The government’s continued focus on developing 50 new tourist destinations, with a special emphasis on spiritual sites, will further drive growth of domestic and inbound travel. Spiritual tourism has been witnessing strong growth in the last two years. Bookings to destinations like Varanasi, Gaya, Shirdi, Puri, Haridwar, and Vaishno Devi increased by 100-150% YoY on ixigo last quarter. Initiatives like visa fee waivers and e-visa options for select tourist groups will further enhance India’s appeal as a global destination, making travel more accessible and boosting inbound tourism.”