Union Budget 2026 Expectations: Hotels Seek Full Infrastructure Status, Tax, Financing & Regulatory Benefits

As the Union Budget 2026 approaches, leaders from India's hospitality and allied sectors have outlined a clear set of expectations, calling for structural reforms, infrastructure recognition and policy alignment to unlock the sector's full growth potential. Industry voices agree that while hospitality has emerged as a major contributor to employment, GDP and foreign exchange earnings, it continues to face policy gaps that limit its scalability and long-term resilience.

Union Budget 2026 Expectations: Hotel Association of India Seeks Policy Support to Boost Hospitality Sector Growth

For the upcoming Union Budget, the Hotel Association of India (HAI), the national body representing Indian hotels, has urged the government to focus on sector-specific reforms to strengthen the hospitality industry. HAI said the hotel sector deserves proper recognition for its contribution to GDP, employment and foreign exchange earnings.

It has called for hotels to be granted infrastructure status and industry benefits, stating that these measures would encourage investment, boost job creation and help the sector play a bigger role.

"There is a need to further improve the ease of doing business by reducing both- the number and the costs of approvals, NoCs and clearances required to build and operate hotels. A single window clearance mechanism is a provision that requires urgent attention. Re-instating the rewards scheme for FX earnings, higher rate of depreciation for hotels are recommended. Though not related to the budget, the sector also awaits pragmatic GST reforms," said KB Kachru, President, Hotel Association of India (HAI) and Chairman - South Asia, Radisson Hotel Group.

"The expectation is for policies that encourage sustainable growth, simplify the operating environment, and reinforce India's position as a global tourism destination. Continued emphasis on infrastructure development, connectivity, and human capital will be important enablers. A balanced and forward-looking budget can provide the confidence the industry needs to invest, innovate, and contribute more meaningfully to employment and economic progress," said Rachita Sood, GM of Novotel Mumbai International Airport.

Hotels Seek Full Budget Support as Infrastructure Status Remains Limited

The Union Budget 2025‑26 granted infrastructure status to hotels in 50 selected destinations, but the hospitality sector argues that this recognition is still far from sufficient. Full infrastructure classification would provide hotels with benefits such as easier access to soft financing, lower utility tariffs and rationalised property taxes-advantages routinely available to sectors like highways and ports.

Despite having similar capital requirements, hotels continue to be excluded from these incentives, limiting their growth and investment potential.

"As we approach the 2026 Budget, India's hospitality sector waits with measured optimism. We've created 46.5 million jobs and are projected to support 64 million by 2035, yet do not get classified as infrastructure which is a looming constraint on scale," said Shwetank Singh, Executive Director, Chalet Hotels Limited.

"Equally critical is bringing tourism into the concurrent list. Policy coordination between center and states has long remained fragmented. To ensure seamless implementation across diverse destinations, tourism, and by extension, hospitality requires constitutional alignment within shared legislative space. This will further help in the holistic development of the destination giving a seamless experience to the traveller. The pathway to $1 trillion contribution to the GDP from the sector would then be closer to reality," Mr Singh added.

"As India prepares for Budget 2026-27, the macroeconomic outlook remains resilient, with strong growth fundamentals and rising aspirations across Tier 2 and Tier 3 cities. A growing middle class is increasingly seeking luxury residential and hospitality experiences that are premium, well-designed, efficient and sustainable. With consistent policy support and a sharper focus on durability, sustainability and user experience, India's hospitality offerings can be significantly strengthened," said Abdulkader Bengali, MD of Hansgrohe India.

From the allied industry perspective, Mr Bengali highlighted changing consumer aspirations and the need for supportive policy frameworks.

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