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To boost employment-led growth, the Centre will launch a new programme to develop the country’s top 50 tourist destination sites in partnership with state governments through a “challenge mode”, proposed Finance Minister Nirmala Sitharaman in the Union Budget FY26 speech.
In her budget speech, Sitharaman said that state governments will have to provide the land for building key infrastructure.
“Hotels in those destinations will be included in the infrastructure HML (harmonious master list),” she said.
The inclusion in HML entails ‘Infrastructure Status’ to create hotel room capacity in these destinations. The proposed move will make loans taken to create this capacity easily available with low interest rates.
Sitharaman further proposed to stimulate employment-led growth in the tourism sector by organising intensive skill-development programmes for youth, including in Institutes of Hospitality Management, providing ‘MUDRA’ loans for homestays, and improving ease of travel and connectivity to tourist destinations.
Besides, provisions will be made for performance-linked incentives (PLI) to states for effective destination management, including tourist amenities, cleanliness, and marketing efforts. We will also introduce streamlined e-visa facilities along with visa-fee waivers for certain tourist groups.
The Centre had earlier approved interest-free loans to 40 projects across 23 states for 50 years worth Rs 3,295.8 crore under the special assistance to states for capital investment. That initiative aimed to create “iconic tourist centres of global standards” by supporting their development and marketing.
India’s tourism sector reached its pre-pandemic GDP contribution level of 5 per cent in FY23 and created 7.6 crore jobs.
Emphasis on developing tourism infra at spiritual site
Furthermore, Sitharaman cited that the Union Budget FY26’s proposals continue with the emphasis on places of spiritual and religious significance in the July budget; there will be a special focus on destinations related to the “life and times of Lord Buddha”.
Promoting medical tourism
Sitharaman said that ‘Medical Tourism’ and ‘Heal in India’ will be promoted in partnership with the private sector, along with capacity building and easier visa norms.
Budgetary allocation
In terms of budget FY26 estimates (BE FY26), the ‘Swadesh Darshan’ scheme, which aims to integrate the development of tourism destinations, including theme-based tourist circuits, has been allocated Rs 1,900 crore from the revised estimate (RE FY25) of Rs 350 crore, while it had been pegged at Rs 1,750 crore in BE FY25.
This programme was rechristened the ‘Swadesh Darshan Scheme 2.0’ (SD 2.0) in 2022, with the vision of developing sustainable and responsible tourism destinations. Under this scheme, 34 projects had to be approved, with a total funding of Rs 793.2 crore.
The ‘Pilgrimage Rejuvenation and Spiritual Augmentation Drive’ (PRASHAD), which aims to develop tourism infrastructure at identified pilgrimage destinations and heritage cities, has been allocated Rs 240 crore BE FY26 from Rs 100 crore RE FY25 and Rs 240 crore BE FY25.
Overall, the Ministry of Tourism’s budgetary allocation was raised to Rs 2,430 crore BE FY26 from Rs 732 crore in RE FY25 and Rs 2,374.07 crore in BE FY25. The allocation includes provisions for central sector schemes or projects, establishment expenditures of the Centre, and other central sector expenditures.
Industry welcomes announcements
According to Pradeep Shetty, Spokesperson, Hotel and Restaurant Association of Western India- HRAWI and Vice President, Federation of Hotel and Restaurant Associations of India (FHRAI), the plan to develop top 50 tourism destinations in partnership with state governments is a major initiative.
“This collaboration will not only improve infrastructure but also help spread tourism across the country, attracting more visitors and benefiting local communities. Additionally, the inclusion of hotels in these destinations in the harmonious master list is a significant move. This aligns with our long-standing request for granting of ‘Infrastructure Status’ to the hospitality industry,” Shetty said.
“This will facilitate access to cheaper, long-term financing, enabling hotels in these newly developed destinations to upgrade their facilities and offer world-class services, further boosting the sector.”
He pointed out that focusing on medical and wellness tourism through the ‘Heal-in-India’ initiative is a forward-thinking move that will strengthen India’s position as a global leader in healthcare.
In addition, Rajiv Mehra, GeneralSecretary, Federation of Associations in Indian Tourism and Hospitality ( FAITH) and President IATO, said that new tourism destinations in India would likely emerge given the proposal to develop the top 50 tourist destination sites in the country
“The current tourism destinations can become much better given the proposal that States will be given the performance-linked incentives for effective destination management,” Mehra said.
“Inbound tourism can be given a stimulus given e-visa waiver to special tourism groups. Additionally the segments of Medical and Buddhist tourism segments will also likely be given a boost given the enhanced support under ‘Heal in India’ and destinations under Buddhism.”
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Published on February 1, 2025
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