HBI Staff | Hyderabad 
As the Union Budget 2025 approaches, India’s hospitality sector is anticipating a range of announcements to address challenges, spur growth, and attract investment. Industry leaders are calling for targeted reforms and incentives to further strengthen the sector, which has seen a robust recovery post-pandemic but faces persistent issues such as high taxation and infrastructure gaps.
Reduction in GST Rates
The hospitality industry has long been advocating for a reduction in Goods and Services Tax (GST) rates on hotel room tariffs. Stakeholders are urging the government to bring GST on room tariffs under INR 7,500 to 12% from the current 18% to make Indian tourism more globally competitive. They also seek parity in GST for standalone restaurants and hotel-based F&B outlets.
Infrastructure and Connectivity Development
With the government’s focus on promoting domestic and inbound tourism, hoteliers are hopeful for increased allocations toward infrastructure development. Investments in road, rail, and air connectivity to tier-2 and tier-3 cities, along with budgetary support for tourism circuits like the Ramayana and Buddhist Trails, are expected to encourage regional tourism and benefit the hospitality sector.
Industry Status for Hospitality
A long-standing demand of the hospitality industry is the grant of “infrastructure” status to hotels with a project cost of ₹50 crore and above, a move that would facilitate easier access to long-term loans at lower interest rates. Stakeholders believe this step could accelerate the development of mid-segment and luxury hotels in smaller cities.
Tax Benefits for Travel and Tourism
To boost domestic tourism, the industry is seeking tax exemptions on expenses incurred for travel and accommodation. Experts suggest reintroducing the Leave Travel Allowance (LTA) benefit for employees and extending it to cover international travel expenses.
Support for Sustainability Initiatives
With sustainability becoming a key focus, the hospitality sector hopes for incentives to adopt green practices, such as tax breaks for investments in renewable energy, water conservation, and waste management systems.
Skilled Manpower Development
The sector faces a shortage of skilled workers, and hoteliers expect the government to announce schemes for hospitality-focused skill development programs. Increased investment in training institutes and partnerships with global institutions are seen as critical to addressing this issue.
Boost to Adventure and Medical Tourism
As India continues to emerge as a destination for adventure and medical tourism, stakeholders are requesting policy support and financial incentives to develop these niche segments.
The hospitality industry is optimistic that the Union Budget 2025 will address these critical areas, paving the way for sustained growth and establishing India as a leading global tourism destination. With the G20 momentum still fresh and domestic tourism on the rise, the right policy framework could significantly boost the sector’s contribution to the country’s GDP and employment.
Jai Sreedhar, Joint Managing Director and CEO, Rosetta Hospitality
As the hospitality sector continues to recover and grow, the upcoming Union Budget 2025 offers a significant opportunity to address some long-standing challenges and help the industry reach its full potential.
1. Rationalisation of GST:
The current GST structure creates challenges, especially for luxury hotels. Rationalising GST rates and introducing uniformity across categories would enhance affordability for travelers and simplify compliance for operators, ultimately driving demand and revenue.
2. Enhanced Funding Support:
The hotel industry needs better funding support from both the government and banks to help with the development of new projects. Easier access to loans with favorable terms would encourage investment in infrastructure and promote overall growth in the sector.
3. Input Tax Credit on Construction Costs:
One of the pressing issues is the inability to claim input tax credit on construction costs. Allowing this would significantly ease the financial burden on hotel developers, incentivizing investment and expansion in the sector.
The hospitality industry is a critical contributor to the economy, generating employment and attracting both domestic and international tourism. Addressing these key areas in the budget would not only strengthen the sector but also contribute to India’s overall economic growth.
Manoj Bhat, MD & CEO, Mahindra Holidays & Resorts India Limited
“As we look forward to the Union Budget 2025, we are optimistic about transformational initiatives that will further propel India’s hospitality sector to new heights. The sector holds immense potential, as evidenced by an impressive occupancy rate of 68% in the last financial year—the highest in a decade—driven by a surge in both leisure and business travel. However, despite over 230 million international arrivals recorded in the Asia-Pacific region in 2023, India accounted for just 7.2 million, highlighting significant untapped opportunities. To capitalize on this potential, continued investments in robust infrastructure development are essential. We anticipate that the Union Budget will prioritize policies that accelerate infrastructure growth, streamline approvals, and encourage private sector participation. Granting the industry full sector status could be an effective way to fast-track financing and approvals, and strengthen India’s position as a global tourism hub.
Policies which will foster innovation in sustainable tourism and introducing incentives for adopting green practices, which will not only benefit businesses but also ensure long-term environmental stewardship could add another dimension to the progress of the industry.”
Saurabh Wadkar, Founder, Rooted – a gourmet Indian meal subscription service
“The Union Budget 2025 offers a golden opportunity to uplift India’s restaurant and food delivery sector, especially for small businesses that are the heart of this industry. Reinstating Input Tax Credit (ITC) under GST could provide much-needed relief by lowering operational costs and boosting profitability for countless restaurants and cloud kitchens.
A reduction in GST rates to 12% for restaurants and delivery services would make pricing more competitive and align with global standards, giving businesses a stronger edge. Recognizing ghost kitchens and food delivery ventures with infrastructure status could open doors to affordable loans and tax benefits, helping entrepreneurs thrive in smaller cities and towns.
Encouraging the adoption of technology through incentives could empower small players to streamline operations, cut costs, and grow sustainably. Additionally, celebrating regional cuisines through culinary tourism initiatives would not only boost local restaurants but also highlight India’s incredible food heritage.
With thoughtful measures like these, the Budget could transform the sector, creating opportunities for small businesses to flourish and strengthening their role as drivers of jobs, culture, and economic growth.”
Teja Chekuri, Founder- Full Stack Ventures
The F&B, Restaurant and Alco Bev sectors, significant contributors to the nation’s economy in many ways ranging from consumption to promoting tourism, promoting economic growth to many other sectors directly or indirectly affected by the operations of them, Safe to say these are few of the highest employment creators in India,
In the upcoming Union Budget 2025-26, It is important that there are actionable and pro-public reforms that will increase investment and support overall economic growth of the nation are the need of the time, especially when the world is becoming one thanks to the technology. One of the primary and swift action requirements is posed by the licensing systems that create roadblocks to a chain of growth events that nurture the country’s economy.Simplifying and streamlining then through a single window process would be a futuristic approach to a sustained and long-lasting solution boosting growth and exposure to the lively and thriving people of our vibrant Nation, India.
