The Federation of Hotel and Restaurant Associations of India (FHRAI) has unveiled its ambitious agenda for the Budget 2025-26, calling on the government to introduce transformative reforms that could redefine India’s hospitality and tourism landscape. As the industry emerges from the shadows of economic uncertainty, FHRAI emphasizes the need for robust policy measures to unleash its true potential, ensuring its pivotal role in economic recovery, employment generation, and foreign exchange earnings.
Tourism and hospitality jobs account for the most employment in India while adding substantially to GDP. High rates of taxation combined with overly restrictive regulations and insufficient public infrastructure pose serious problems for the industry. FHRAI thinks these budget measures from the government in 2025–26 will help this sector become a major engine for everyone’s success.
FHRAI urges the government to grant infrastructure status to hotels and convention centers when investments reach ₹10 crore.
This status would offer the sector the following benefits:
Lower borrowing costs: Making loans to hotels less costly for borrowers.
Easier access to credit: Hotel and hospitality projects should receive top priority on banks’ loan approval lists.
Long-term investments: Big projects across the nation receive funds mainly from local investors and investors from other countries.
These changes will boost project financial performance to draw more investors looking to put money into India’s hospitality sector.
Rationalizing GST Rates
The Federation wants to simplify GST taxes for lodging facilities and eating places to attract more tourists. The wide spread of GST rates (12% to 28%) makes India less attractive to travelers inside and outside the country. FHRAI wants the hospitality sector to follow a single 12% GST rate that meets international travel standards so India can become more attractive to tourists.
Fostering Skill Development
Lacking scale, India’s hospitality sector suffers from a whopping skill gap. FHRAI wants the government to earmark funds for skill development programs—both for rural and semi-urban communities. The sector was able to generate sustainable livelihoods by training the workforce to address employment challenges.
Promoting Sustainability
Across the board, the global trend towards sustainable tourism calls for tax benefits for eco-friendly practices by Indian hotels and restaurants, as suggested by FHRAI.
These could include:
Adoption of tax credits for renewable energy sources.
Waste management and water conservation of subsidizing systems.
Such steps would place India as a pioneer of sustainable hospitality, branding in front of environmentally conscious visitors and investors.
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Easing Regulatory Burdens
Another one is simplifying regulatory processes. The hotel and restaurant approvals can be through a single window clearance system, according to FHRAI. The delay would be reduced and the doing of business in the sector would become easier.
With that, the Federation is optimistic that the government will take into account the hospitality sector’s potential and include these measures in Budget 2025-26. India can cement its status as a global tourism hub if it addresses taxation, infrastructure and skill development challenges.
The reforms proposed by FHRAI have the potential to create a ripple effect, benefiting allied industries such as transportation, retail, and entertainment. A robust hospitality sector would not only boost India’s economic growth but also cement its reputation as a world-class destination for travel and leisure.
The hospitality industry awaits Budget 2025-26 with great anticipation, hopeful that its concerns will translate into actionable reforms.