In a landmark move for the travel trade, Finance Minister Nirmala Sitharaman’s Union Budget 2026-27 has delivered a dual strike of fiscal relief and long-term asset creation. By slashing the Tax Collected at Source (TCS) on overseas tour packages from the previous tiered rates of 5% and 20% to a uniform flat 2%—regardless of the package value—the government has effectively removed a major friction point for outbound operators and leveled the playing field against foreign OTAs. This immediate liquidity boost is paired with a massive INR 12.2 lakh crore capital expenditure outlay, which includes the development of seven high-speed rail corridors and a new Seaplane VGF Scheme. Together, these measures signal a strategic pivot: lowering the cost of global exploration for Indians while aggressively building the connectivity infrastructure needed to transform the domestic hospitality landscape.
What does the Union Budget 2026-2027 offer to the travel and Hospitality industry?
Union Finance Minister Nirmala Sitharaman began her Budget Speech for the Union Budget 2026-27 on Sunday, February 1, at 11 am. The Budget, is Sitharaman’s record ninth one consecutively.
Push for infrastructure
Speaking on delivering a powerful push for infrastructure, FM says that the govt will continue to focus on developing infra in cities with over 5 lakh population i.e. Tier 2, Tier 3 cities. She proposes increase of Public Capital Expenditure to INR. 12.2 lakh crores. An allocation of INR 5,000 crore has been earmarked over five years for developing City Economic Regions. A Coastal Cargo Promotion Scheme will work to raise the share of inland waterways and coastal shipping from 6 per cent to 12 per cent by 2047.
Proposal to Set Infrastructure Risk Guarantee Fund
Union Finance Minister Nirmala Sitharaman proposed to set up the Infrastructure Risk Guarantee Fund. She also proposed setting up of dedicated Real Estate Investment Trusts (REITs) to recycle assets of Central Public Sector Enterprises (CPSEs).
Waterways Freight Corridor Connecting Port Cities
FM Sitharaman proposes establishing new dedicated freight corridors connecting Dankuni in the East to Surat in the West. Operationalise 20 new national waterways over the next five years. Starting with National Waterways 5 in Odisha to connect mineral-rich areas of Talcher and Angul, and industrial centres like Kalinganagar to the ports of Paradip and Dhamra. A ship-repair ecosystem will be set up in Varanasi and Patna. Additional connectivity measures include a Seaplane VGF Scheme to support operations
7 High Speed Corridors Between Cities As Growth Connectors
FM proposes seven high speed corridors between major cities like Delhi, Bengaluru, Chennai and Varanasi. The government plans to develop seven high-speed rail corridors between cities as growth connectors. This includes Mumbai-Pune, Hyderabad-Pune, Hyderabad-Bengaluru, Chennai-Bengaluru, Delhi-Varanasi, Varanasi-Silliguri.
Push for Medical tourism
Finance minister Nirmala Sitharaman announces plans to establish five regional hubs for medical tourism and proposed a INR 10,000-crore allocation for the Biopharma Shakti programme over the next five years.
Presenting the Union Budget, she said, “I propose to launch a scheme to support states in establishing five regional medical hubs,” which will function as integrated healthcare complexes combining medical, educational, and research facilities.
1.5 lakh caregivers to be trained in the coming year.
3 New All India Institutes Of Ayurveda To Be Set Up
Exporting quality Ayurveda products helps farmers who grow the herbs, said N Sitharaman. The government plans to set up three new All India Institutes of Ayurveda and upgrade Ayush pharmacies. The government plans to upgrade WHO traditional medical centre in Jamnagar.
Integrated health care complexes that combine medical, educational and research facilities. They will have Ayush centres, medical value tools and facilitation centres and infrastructure for diagnostics, post care and rehabilitation.
These hubs will provide diverse opportunities, job opportunities for health professionals, including doctors and AHPs. Ancient Indian yoga, already respected in several parts of the world, was given a mass global recognition when Honourable Prime Minister took it to the UN. Post COVID, Ayurveda gained a similar global acceptance and recognition.
Exporting quality Ayurveda products helps farmers who grow the herbs and youth who process the products. To meet growing global demand, a few more steps are being taken. I propose to, one, set up three new all-India institutes of Ayurveda.
Two, upgrade Ayush pharmacies and drug testing labs for higher standards of certification ecosystem and make available more skilled personnel. Three, upgrade the WHO Global Traditional Medicine Centre in Jamnagar to bolster evidence-based research, training and awareness for traditional medicine.
TCS Rates: Reduction of TCS on overseas tour program packages and on LRS remittances for education and medical purposes to 2%.
National institute of tourism to be set up
A pilot scheme for upskilling 10,000 guides in 20 iconic tourist sites through a standardised, high-quality, 12-week training course in hybrid mode in collaboration with the Indian Institute of Management. A national destination digital knowledge grid will be established to digitally document all places of significance, cultural, spiritual and heritage. This initiative will create a new ecosystem of jobs for local researchers, historians, content creators and technology partners.
India has the potential and opportunity to offer world-class trekking and hiking experience. We will develop ecologically sustainable mountain trails in Himachal Pradesh, Uttarakhand and Jammu Kashmir. Also in Arakku Valley in the Eastern Ghats and Pudigal Malai in the Western Ghats.
Turtle trails along key nesting sites in the coastal areas of Odisha, Karnataka and Kerala. And three bird-watching trails along the Pulicat lake in Andhra Pradesh, Tamil Nadu. It's on the border.
Under the visionary leadership of Honourable Prime Minister, we established the international big cat alliance in 2024. This year India is hosting the first ever global big cat summit where heads of governments and ministers from 95 range countries will deliberate on collective strategies for conservation, heritage and culture tourism. I propose to develop 15 archaeological sites including Lotham, Dolavira, Rakigadi, Adichanallu, Sarnath, Hastinapur and Leh palace into vibrant experiential cultural destinations.
Excavated landscapes will be open to the public through curated walkways. Immersive storytelling skills and technologies will be introduced to help conservation labs, interpretation centres and guides. The sports sector provides multiple means of employment, skilling and job opportunities.
Finance Minister brings up country's gaming and animation sector
FM Sitharaman said, "India’s Animation, Visual Effects, Gaming and Comics AVGC sector is a growing industry, projected to require 2 million professionals by 2030. I propose to support the Indian Institute of Creative Technologies, Mumbai in setting up AVGC Content Creator Labs in 15,000 secondary schools and 500 colleges."
Northeast gets boost with push to 'Mission Purvodaya'
Sitharaman says the Northeast will now get a boost with a push to the Centre’s ‘Mission Purvodaya’. “I propose the development of an integrated East-Coast industrial corridor with well connected road at Durgapur, creation of five tourism destinations in five Purvodaya states, and provision of 4,000 e-buses.
