EY-FICCI report urges 9% GST reduction for premium stays to boost India’s global competitiveness
Representative Image (3)-3
International visitor spending is projected to grow at 5.5% per annum, reaching USD 2.95 trillion by 2034.
Ernst & Young LLP (EY India), in collaboration with the Federation of Indian Chambers of Commerce & Industry (FICCI), in its latest report “Reimagining Inbound Tourism in India: Trends, Technology & Transformational Opportunities – Towards Incredible India 4.0,” has proposed a revised Goods and Services Tax (GST) structure for hotel accommodations, recommending a reduction in the higher tariff category from 18% to 9% for room rates above INR 7,500, while retaining the existing 5% slab for tariffs between INR 1,000 and INR 7,500, a targeted intervention aimed at easing the tax burden, enhancing value perception, and better aligning India’s hospitality pricing with competing global destinations.
“Higher cost of accommodation, transportation and taxes are the reason India is often perceived as an expensive destination in comparison to countries such as Thailand and Vietnam. India currently levies 5% GST is for room tariffs between INR 1,000 and INR 7,000 and 18% for tariffs above INR 7,500. The 18% tax on higher tariff categories impact overall price competitiveness particularly for international travellers. A reduced GST of 9% for tariffs above INR 7,500 will enhance value perception, improve affordability across segment and better align India with competitive destinations,” said the report.
As per the report, by addressing cost dynamics around accommodation, taxation, and transport, India can position itself as a compelling value destination against its Southeast Asian counterparts. International visitor spending is projected to grow at 5.5% per annum to reach USD 2.95 trillion by 2034 and it also represents the most compelling growth opportunity ahead.
The report presents a comprehensive and forward-looking roadmap to unlock India’s inbound tourism potential, advocating a decisive shift from a fragmented, destination-led approach to a unified, experience-driven tourism ecosystem. The report presents a bold strategic vision — transforming India's positioning from “a country with many destinations” to “a destination with infinite experiences”, built on six interconnected imperatives: branding, pricing, experience, infrastructure, policy, and technology.
The report also identifies key structural challenges constraining India’s global competitiveness — fragmented state-led branding, limited global marketing outreach, lack of experience-led packaging, and ease-of-travel barriers including connectivity and visa processes.
India’s tourism landscape reflects a striking paradox, strong domestic demand yet a persistent inbound gap, with foreign tourist arrivals at approximately 9.9 million in 2024, modest against competing destinations. The tourism sector currently contributes approximately INR 21 trillion to GDP and supports over 46 million jobs. With a hospitality pipeline exceeding 1,00,000 rooms, the report notes that supply growth must align with international demand to ensure sustainability.
From Sports and Culinary Tourism to Spiritual Wellness, Wildlife, and Event-led Travel, India’s diverse offerings are increasingly capturing global imagination. India’s live entertainment sector surpassed INR 12,000 crore (USD 1.28 billion) in 2024, projected to grow at 19% CAGR over three years, making festivals, concerts, and sporting events powerful inbound drivers. AI and digital platforms are redefining travel discovery, while the rise of Gen Z, women, and solo travellers signals a fundamental shift in traveller profile that India must be equipped to serve.
