Interim Budget: Startups See Big Opportunity As Tourism Takes Centre Stage

Finance minister Nirmala Sitharaman made a number of announcements for the tourism sector in her speech for interim Budget 2024-25, highlighting the tremendous opportunities it presents for local entrepreneurship.

In her speech, the finance minister laid out the plans to develop tourist centres and provide connectivity to access these centres. 

Sitharaman increased the Budget estimate for the tourism industry by over 40% to INR 2,449.62 for FY25 from the revised estimate of INR 1,692.10 Cr for FY24. The budgeted estimate for the tourism ministry was INR 2,400 Cr for FY24.

“The success of organising G20 meetings in 60 places presented the diversity of India to a global audience. Our economic strength has made the country an attractive destination for business and conference tourism. Our middle class also now aspires to travel and explore. Tourism, including spiritual tourism, has tremendous opportunities for local entrepreneurship,” she said. 

The statement comes at a time when spiritual tourism is on the rise in the country and the opening of the Ram temple in Ayodhya is expected to provide a further boost to it.

The finance minister said that states will be encouraged to take up comprehensive development of iconic tourist centres, branding and marketing them at global scale in order to make the most of the tourism opportunity.

“A framework for rating of the centres based on quality of facilities and services will be established. Long-term interest free loans will be provided to states for financing such development on a matching basis,” the finance minister said. 

Indian travel, tourism and hospitality focussed startups welcomed the government’s announcements as it would provide them an opportunity to further expand their user base and offerings.

Commenting on the announcements, Manish Rathi, cofounder and CEO of IntrCity SmartBus, said, the provision to provide interest-free loans to states is significant as it would facilitate crucial improvements in infrastructure and amenities. 

Echoing similar sentiment, B2B travel tech startup TravClan’s cofounder Chirag Agrawal said that would encourage long-term development of tourist destinations and help unlock India’s tourism potential.

The Push To Promote Islands

To cater to the growing tourism demand in the country, FM Sitharaman said the government would take up projects for port connectivity, tourism infrastructure, and amenities on Indian islands, including Lakshadweep.

It is pertinent to note that following Prime Minister Narendra Modi’s visit to Lakshadweep islands, a diplomatic dispute arose between India and Maldives. As a result, there has been a renewed interest in the country for visiting Lakshadweep.

Indian startups are already capitalising on this travel demand for the union territory. Earlier,  EaseMyTrip cofounder Prashant Pitti said the startup would come up with “crazy special-offers” for Lakshadweep travel, while MakeMyTrip said it observed a 3,400% increase in on-platform searches for Lakshadweep since PM Modi’s visit. 

Commenting on the tourism-related announcements in the Budget, MakeMyTrip cofounder and Group CEO Rajesh Magow said, “The commitment to bolster domestic tourism through initiatives spanning rail and air travel, coupled with the ongoing emphasis on tourism-led destinations, particularly in the realm of island tourism and spiritual tourism, reflects a strategic vision for the long-term growth of the travel and tourism sector.” 

On the other hand, Aditya Sanghi, CEO and cofounder of Hotelogix, said the Budget proposals will not only increase tourist inflows but also enhance the experience for travellers, thereby providing a significant boost to the hospitality sector.

As per IBEF, India’s travel market is anticipated to surge to $125 Bn by FY27 against $75 Bn in FY20. Additionally, projections indicate that international tourist arrivals are poised to reach 30.5 Bn by 2028.