India's Budget Boosts Tourism: Stocks Soar!

India's tourism sector is set to benefit from recent budget allocations and policy changes. Listed hotel companies, including EIH Ltd, ITC Hotels Ltd, and Lemon Tree Hotels Ltd, experienced a 2-4% stock increase on February 1st, signaling optimism for the sector's future. These measures are expected to enhance average room rates and occupancy levels.

Further measures aimed at boosting foreign travel include a reduction in the tax collected at source (TCS) on overseas tour packages to 2%, making international trips more economical. The government also plans to establish regional medical hubs in partnership with the private sector, featuring Ayush centers and medical value tourism facilitation centers to attract foreign tourists.

Looking ahead, the 2026 ICC Men's T20 World Cup, co-hosted by India and Sri Lanka from February 7 to March 8, 2026, is identified as a near-term demand driver for hotels in participating cities. Despite ongoing efforts, foreign tourist arrivals in the first nine months of 2025 remained 19% below pre-COVID levels, underscoring the need for continued promotional activities.

Industry projections suggest a 5% rise in average room rates for the hotel industry in FY26, with occupancy expected to reach 72% and further improve in FY27. These developments highlight a strategic push to enhance India's appeal as a global tourist destination and a medical tourism hub.