What Are the Biggest Challenges for India’s Travel Industry?

The rapidly approaching Skift India Forum will feature several prominent executives discussing issues impacting travel in the country. So what are the biggest challenges facing India's travel industry?

We turned to our answer engine, Ask Skift 2.0. It used information appearing in our past news coverage, and we also did additional reporting.

What Ask Skift Said

India's travel industry faces several significant challenges that have been hindering its growth, particularly in the inbound tourism sector. Despite the country's rich cultural diversity and geographical appeal, several factors contribute to its underperformance in attracting international tourists. Here are the primary challenges:

Visa Complications: One of the major hurdles for potential tourists is India's cumbersome visa process. While the government has introduced some measures like free visas for a limited number of tourists, the complexity and inefficiency of the visa application process remain deterrents. Unlike countries such as Thailand and Indonesia that offer seamless visa-on-arrival options, India's process requires multiple documents and has technical glitches that frustrate applicants.

Marketing and Promotion: There has been a drastic reduction in the budget allocated for promoting India as a global tourist destination. In the 2025 Union Budget, funding for global tourism promotion was slashed by 97%, which raises concerns about the government's commitment to attracting foreign visitors. This lack of marketing investment can significantly impact India's ability to draw international tourists.

Pollution and Perception Issues: India's air quality, especially in cities like Delhi, poses a significant challenge. During certain times of the year, pollution levels are alarmingly high, which can deter tourists and lead to cancellations or shortened visits. Additionally, pollution affects the preservation of iconic monuments, such as the Taj Mahal, further diminishing India's allure as a tourist destination.

Infrastructure and Connectivity: Although there have been improvements, India's tourism infrastructure is still inadequate to meet the growing demand. The country has a limited number of branded hotel rooms and struggles with insufficient transport connectivity, particularly last-mile connectivity. Plans to build new airports are in place, but these need to be complemented by better infrastructure and services to enhance the tourist experience.

Limited International Tourist Contribution: While domestic tourism is thriving, the contribution from international visitors remains low. This is partly due to the ongoing suspension of tourist visas for key markets like China, which affects overall visitor numbers.

These challenges highlight the areas where India's travel industry needs strategic focus and support to fully realize its potential as a leading global tourist destination. Addressing visa complexities, increasing marketing efforts, improving air quality, and expanding infrastructure and connectivity are critical steps that need attention to boost India's inbound tourism.

What Else You Need to Know

Indian Airlines Haven't Fully Profited From the Travel Boom Yet: Alok Singh, managing director of Air India Express, said recently the country's aviation market could grow 15% in the next decade.

However, the Indian aviation industry is expected to report a net loss of between $230 million and $346 million (INR 20-30 billion) in the current fiscal year and the next one — down from a net profit of about $185 million (INR 16 billion) in the 2024 financial year, according to credit ratings agency ICRA. India Travel Reporter Bulbul Dhawan cited high fuel prices and the depreciating Indian rupee as factors contributing to the airlines' financial struggles.

Limited Hotel Supply: India's hotel industry did experience growth in 2024, with the country passing the 200,000 branded room mark last year. Indian hotels are also expected to sustain record occupancy levels during the 2025 fiscal year, ICRA said at a webinar this January.

But Dhawan reported in January that the country's hotel supply is far below demand. Supply growth for premium hotels was just 3% in the 2024 fiscal year, down from 5% the previous year, according to ICRA.

Inadequate Infrastructure Even in Major Tourist Areas: Despite the enormous revenue the sector generates, Dhawan reports that the country's religious tourism sites are generally not tourist-friendly, adding that many grapple with overcrowding and a lack of cleanliness.

While India's smaller cities are helping drive the country's hotel boom, Hari Sukumar, senior vice president at Jaypee Hotels in Agra, believes that growth in the country's Tier 2 and Tier 3 cities won't continue without infrastructure improvements.

“I don’t see it sustaining for more than three to four years unless there is a huge revamp of infrastructure and connectivity,” Sukumar said.

India's shortcomings in infrastructure are one of the reasons the country has dropped 10 spots in the World Economic Forum's travel and tourism rankings since 2019.