India’s tourism sector is set for rapid expansion, driven by surging domestic travel, luxury hospitality growth, rising incomes, and infrastructure investments reshaping the country’s position in global tourism.India’s tourism sector is entering a period of accelerated expansion, fuelled by rising disposable incomes, robust infrastructure development, and a growing appetite for both domestic and international travel. According to Capitalmind PMS’s latest report, the industry is projected to generate over INR 5,12,356 crore (US$59 billion) by 2028, with Foreign Tourist Arrivals (FTAs) reaching 30.5 million, as per the Ministry of Tourism. Although the sector’s GDP contribution remains 2% lower than the United States and 4% below Thailand, its growth trajectory points to significant untapped potential.
Domestic tourism remains the backbone of this growth story. Domestic Tourist Visits (DTVs) surged 44.98% year-on-year, from 1,731.01 million in 2022 to 2,509.63 million in 2023. Uttar Pradesh led the nation with 478.53 million visits, followed by Tamil Nadu at 286.01 million. Maharashtra topped the list for foreign tourist visits at 3.39 million, followed by Gujarat with 2.81 million. Projections show domestic trips will double from 2.5 billion in 2024 to 5.2 billion by 2030, marking a 13.4% CAGR. Spending patterns reinforce this momentum, with domestic visitor expenditure rising from INR 12.74 trillion in 2019 to INR 14.64 trillion in 2023 and expected to hit INR 33.95 trillion by 2034, at a 7.9% CAGR. Enhanced air, road, and rail networks are central to this expansion, with domestic air passenger traffic forecast to more than double to 693 million by FY30 from 307 million in FY24.
Internationally, India’s tourism sector has regained and surpassed pre-pandemic strength. FTAs rose to 18.89 million in 2023, exceeding the 2019 peak of 17.91 million by 5.47%. South Asia accounted for 29.02% of arrivals, followed by North America (21.82%) and Western Europe (20.40%). Leisure travel led with 46.2%, diaspora visits represented 26.9%, and business travel accounted for 10.3%. Inbound tourism grew by 64% year-on-year in 2023, with an increasing share of high-value visitors choosing India for luxury wellness retreats, Ayurveda resorts, palace stays, and yoga spas — signalling the country’s growing reputation for premium experiences.
The broader economic environment is also shaping this expansion. The IMF’s World Economic Outlook (April 2025) notes GDP growth of 7.4% in 2024, with a projection of 7.1% for 2025. Per capita income reached US$2,711 in 2024 and is forecast to climb to US$4,469 by 2030, an 8.7% CAGR. Rising affluence, a growing share of high- and upper-middle-income households, and increasing urbanisation — set to reach 40% of the population by 2036 — will continue to drive discretionary spending, including travel and hospitality. Between FY21 and FY31, India’s incremental consumption potential is estimated at US$3 trillion, with a 9% CAGR, making it a US$5 trillion consumption economy by 2031.
Aviation is a key enabler for India’s tourism sector. Now the world’s third-largest domestic aviation market, India is on track to become the third-largest overall by 2026. From 50 operational airports in 2000, the network has expanded to 148 and is expected to reach 220 by 2027. Scheduled flights have increased 77.7% over the past decade to 1.3 million in 2024, with domestic flights rising from 613,000 in 2014 to 1.1 million in 2024. IndiGo holds a 53% share of all departing flights. Despite this progress, India still accounts for just 4.2% of global aviation, underscoring vast growth potential.Hospitality supply, particularly in the luxury segment, remains limited. Of India’s 3.4 million hotel keys as of March 2024, only 375,000 belong to the organised sector. Branded hotels represent 45% of this total (170,000 keys), with luxury hotels accounting for just 17% (29,000 keys across 230 properties). High capital costs, scarce land, and lengthy development timelines restrict supply, creating favourable conditions for high occupancy rates of 60–70% in the luxury segment and strong Average Room Rate (ARR) growth. Luxury properties generate Total Revenue per Available Room (TRevPAR) figures 117% higher than upscale hotels and 298% higher than midscale.
Events, weddings, and MICE (Meetings, Incentives, Conferences, Exhibitions) form a lucrative pillar of demand. The Confederation of All India Traders (CAIT) reported 3.8 million weddings between late November and mid-December 2023 alone, generating INR 4.74 lakh crore — a 26% year-on-year increase. India’s wedding industry, worth US$130 billion annually, ranks second globally. Luxury destination weddings in Jaipur, Udaipur, Goa, and Delhi often generate INR 25–30 million per event for high-end hotels, with accommodation accounting for half the total spend.
Corporate travel is another growth driver. Cushman & Wakefield’s data shows India’s office market hit a record 89 million square feet of gross leasing volume in 2024, up 19% from the previous year. Bengaluru led with 25.93 MSF, followed by Mumbai (17.84 MSF) and Delhi-NCR (13.14 MSF). Global Capability Centers (GCCs), employing 1.9 million people, contributed 27% of this growth and are expected to expand further, supporting demand for business hotels and conference venues.With economic expansion, infrastructure upgrades, and a young, travel-ready population, India’s tourism sector is positioned for sustained growth. By aligning premium hospitality offerings with accessible travel options and streamlined visitor experiences, the country has the potential to emerge as one of the world’s most influential tourism markets in the decade ahead.
