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UNLOCKING GROWTH IN
TOURISM AND HOSPITALITY SECTOR

Disclaimer:
copyright@ NITI Aayog, 2026
Every care has been taken to provide correct and up to date information with references.
However, NITI Aayog shall not be liable for any loss or damage whatsoever, including
incidental or consequential loss or damage, arising out of, or in connection with any use of or
reliance on the information in this document. Readers of this document should be aware that
the document may be subject to revisions.
About the Photographs
The photos are taken by the researchers or from publicly available domains.
Suggested Citation
NITI Aayog, (2026). Unlocking Growth in Tourism and Hospitality Sector: Recommendations
for Non-Financial Regulatory Reforms. June, 2026

UNLOCKING GROWTH IN
TOURISM AND HOSPITALITY SECTOR

PREF ACE
The report, Unlocking Growth in Tourism and Hospitality Sector, seeks to address
that gap. It examines the regulatory and procedural landscape that shapes tourism
enterprises across their lifecycle from entry and approvals to operations and identifies the
constraints that af fect investment decisions, project timelines and business viability .

Acknowledgement
Unlocking Growth in Tourism and Hospitality Sector: Recommendations for Non-Financial
Regulatory Reforms seeks to examine the regulatory landscape governing tourism enterprises
in India and identify key constraints affecting investment and operations. This report has been
prepared through a collaborative effort within NITI Aayog, drawing upon detailed analysis,
stakeholder consultations and inter-sectoral inputs.
The team of Shri. Amit Bhardwaj (Deputy Advisor), Ms. Divya Nandini (Consultant) and
Shri. Manavendra Jain (Consultant) of Tourism and Culture Division, NITI Aayog provided
critical analytical inputs in the preparation of this report. The research inputs on reforms were
provided by Ms. Bhuvana Anand, Shri. Pranjal Chandra, Shri. Arpit Beniwal and Ms. Arshiya
Halder from Prosperiti. The team from Atithi Foundation also provided valuable research
inputs and extended support in drafting the report. Design support was provided by NITI
Communication Cell. The report would not have been possible without the enriching inputs
provided by Senior Officials at NITI Aayog, Ministry of Tourism, DPIIT, MoEFCC and NITI
Communication Cell.
We also express our deepest gratitude to the industry stakeholders, hotel associations and
sector experts who participated in extensive consultations over the course of this exercise.
Their continued engagement, practical insights and policy feedback proved crucial in shaping
the recommendations and overall outcomes of the report.
We also extend our sincere thanks to the Shri Bhuvnesh Kumar, Secretary, Ministry of Tourism,
Government of India, for his valuable inputs and engagement that have helped strengthen the
report. We further recognize support of Shri Suman Billa, Additional Secretary, Shri Gyan
Bhushan, Senior Economic Advisor, Ministry of Tourism, and their team.
We express our sincere gratitude to Shri Rajiv Gauba, Member, NITI Aayog, for his vision,
mentorship, guidance and constant support. It was his mentorship, untiring guidance and eye
for details that made this report possible.
This report reflects a shared commitment to improving the ease of doing business in India’s
tourism and hospitality sector and to enabling a more efficient, competitive and investment
friendly ecosystem.

Table of
Contents
1.. Unlocking Tourism Investments in India ��1
1.1 Tourism as a Global High Growth Sector ��1
1.2 India’s Tourism Sector: Scale and Significance �� 2
1.3 The Gap between Potential and Performance �� 2
1.4 Two Complementary Constraints: Demand and Supply �� 4
1.5 Investment as the Central Driver of Tourism Supply �� 5
1.6 Ease of Doing Business as a Critical Enabler �� 6
1.7 Objective of the Report ��7
1.8 Scope of the Study ��8
1.9 Methodology and Approach ��10
2.. Current Landscape for EoDB in Tourism ��15
2.1 Tourism Investment Lifecycle ��15
2.2 The Investor Experience: Three Journeys ��15
2.3 Current EoDB Landscape ��18
2.4 Regulatory Landscape Across Tourism Sub Sectors and Key Constrains �� 19
3.. Accommodation Service Providers ��23
3.1 Issue Category: Restrictive Standards ��23
3.1.1 Reform: Liberalise building standards for hotels to enhance
usable floor area and reduce construction costs �� 23
3.1.2 Reform: Introduce a system of environmental reclassification
for accommodation units ��28
3.1.3 Raise the cap on the number of rooms that can be offered by
homestay units ��29
3.2 Issue Category: Redundancy in Approvals ��31
3.2.1 Remove project-stage approval by the Ministry of Tourism and
de-link star classification of hotels from grant of any license or
approval or sanction of loans ��31
3.2.2 Reform: Introduce a single Health Trade License for hotels for all
ancillary services ��33
3.2.3 Reform: Introduce a single liquor license for hotels for
service areas within the same premises �� 34
3.2.4 Reform: Remove the requirement to obtain local authority
NOCs for homestay registration ��35
3.3 Issue Category: Cumbersome and Fragmented Process �� 37
3.3.1 Reform: Adopt Auto-DCR scrutiny and integrate departmental
NOCs into the building permit portal ��37
4. .Food and Beverage Service Providers ��41
4.1 Issue Category: Recurring compliance and renewal burden ��41
4.1.1 Reform: Increase the turnover threshold and validity period for
FSSAI registration and licensing ��41

4.1.2 Reform: Extend the Validity Period for Liquor Licenses ��43
4.2 Issue Category: Redundancy in Approvals ��44
4.2.1 Reform: Remove the Eating House Licence requirement for
food and beverage service providers ��44
5.. Transport ��49
5.1 Issue Category: Recurring Compliance and Renewal Burden �� 50
5.1.1 Reform: Extend the validity of All India Tourist Permits (AITPs)
and remove state-level entry taxes and fees on tourist vehicles ��50
5.2 Issue Category: Restrictive Standards ��52
5.2.1 Reform: Revise the re-registration requirement for vehicles
relocated to another state for more than twelve months �� 52
6.. Tour Operators and Travel Agencies ��57
6.1 Issue Category: Restrictive Standards ��58
6.1.1 Reform: Remove minimum capital, educational and experience
requirements to register as a tour operator or travel agency �� 58
7. Environment, Coastal, and Forest Related Regulations for
Tourism Related Projects ��63
7.1 Environmental Clearance ��63
7.1.1 Reform: Constitute a dedicated Expert Appraisal Committee (EAC)
at the State level for expedited appraisal and grant of Environmen-
tal Clearance (EC) to hotel projects ��63
7.2 Coastal Regulation Zone (CRZ) Clearance �� 65
7.2.1 Reform: Issue guidelines for granular mapping of coastal areas to
simplify Coastal Regulation Zone (CRZ) clearance �� 65
7.3 Forest Related Regulations ��67
7.3.1 Reform: Mandate high-resolution mapping of forest lands and inte-
grate with revenue records for forest land diversion approval �� 67
8. .Visa Reforms ��71
8.1 Role of Visa Facilitation in Tourism Outcomes �� 71
8.2 Structure and Key Issues in India’s Visa Regime �� 71
8.2.1 Limited Access and Restrictive Design �� 72
8.2.2 Shorter Validity and Limited Repeat Travel �� 73
8.2.3 Friction in application process ��74
8.2.4 Fragmented marketing and absence of loyalty programmes �� 76
8.3 Easing the Challenges in Visa Application ��77
8.4 Reform Agenda: Transition to a Tourist Visa-on-Arrival (VoA)
Framework ��77
8.4.1 Introduction of Tourist Visa-on-Arrival (VoA) �� 77
8.4.2 Enabling Multiple Entry and Repeat Travel �� 78
8.4.3 On-Arrival Registration and Digital Authorisation �� 78
8.4.4 Rationalisation of Visa Categories ��79
8.4.5 Targeted Country Selection Framework �� 79
8.4.6 Strengthening Digital and Payment Infrastructure �� 79
8.4.7 Enhancing Visitor Retention and Experience �� 80
9.. Conclusion ��83

Abbreviation Full Form
AITP All India Tourist Permit
ASEAN Association of Southeast Asian Nations
BRAP Business Reforms Action Plan
BEE Bureau of Energy Efficiency
CLU Change of Land use
CPCB Central Pollution Control Board
CRZ Coastal Regulation Zone
CTO Consent to Operate
DPIIT Department for Promotion of Industry and Internal Trade
DCR Development Control Regulations
EAC Expert Appraisal Committee
EC Environmental Clearance
EoDB Ease of Doing Business
FAR Floor Area Ratio
F&B Food and Beverage
FMCSA Federal Motor Carrier Safety Administration
FSSAI Food Safety and Standards Authority of India
FTAs Foreign Tourist Arrivals
GDP Gross Domestic Product
GST Goods and Services Tax
HTL Health Trade License
HRACC Hotel & Restaurant Approval & Classification Committee
HVS Hospitality Valuation Services
IPS International Passenger Survey
MICE Meetings, Incentives, Conferences and Exhibitions
MoEFCC Ministry of Environment, Forest and Climate Change
MoT Ministry of Tourism
MVIMS Motor Vehicle Information Management Systems
NOC No Objection Certificate
NPCI National Payments Corporation of India
NSWS National Single Window System
OECD The Organisation for Economic Co-operation and Development
OER Occupational Entry Regulations
SEAC State Expert Appraisal Committee
SEIAA State Environment Impact Assessment Authority
TAN Tax Deduction and Collection Account Number
TTDI Travel & Tourism Development Index
UNESCO United Nations Educational, Scientific and Cultural Organization
UDH Urban Development and Housing
UCR Unified Carrier Registration
Vo A Visa-on-Arrival
VKM Vehicle Kilometres Measured
WTTC World Travel & Tourism Council
WEF World Economic Forum
List of
Abbreviations

Figure 1.3: International Tourist Arrivals by Country (2024, Millions) ��3
Figure 1.6: India’s TTDI Performance Compared to Peers (2024) ��7
Figure 1.8: Tourism Service Providers Covered in the Report ��8
Figure 3.1.1: Comparing the Built Form of Hotels on 5,000 sqm Plots Across
Jurisdictions ��24
Figure 3.1.2: CPCB Environmental Classification and Respective Compliance
Requirements ��28
Figure 3.2.2: Types of Health Trade Licence (Health Trade Licence) for Hotels
in Mumbai: ��34
Figure 4.1.2: Retail Bar Licensing Framework Across Select States in India ��43
Figure 5: Regulatory Framework for Transport Operators in India ��
Figure 8.2.1(a): Variations in E-Visa Across Categories ��72
Figure 8.2.1(b): Flexible Visa Regimes and Corresponding FTAs ��73
Figure 8.2.2: Visa Validity and Number of Entries Allowed by Country ��73
Figure 8.2.3(a): Issues with India’s e-Visa Portal ��75
Figure 8.2.3(b): Friction Points at Each Stage of the Tourist Journey ��76
List of
Tables and Graphs

CHAPTER 01
Unlocking Tourism
Investments in
India

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 1
1. Unlocking Tourism Investments in India
1.1 Tourism as a Global High Growth Sector
Tourism is a key pillar of the global economy. In 2024, the travel and tourism sector
contributed ~10% to the global GDP, accounting for every one in ten jobs worldwide.
1

International visitor spending reached USD 1.87 trillion, growing nearly 12% year-on-
year, while domestic visitor spending hit a record USD 5.3 trillion.
2
By 2035, the sector’s
global contribution is projected to reach USD 16.5 trillion, growing at 3.5% per annum,
outpacing the broader global economy’s forecast of 2.5%.
3
Beyond its scale, tourism is significant for developing economies due to three reasons.
First, it is highly employment-intensive, generating jobs across the skill spectrum –
from entry-level roles in hospitality and transport to specialised roles in management,
experience design, and digital services – making it a powerful driver of inclusive growth.
Second, tourism enables geographically distributed development by creating economic
activity at the location of natural and cultural assets, including heritage towns, coastal
regions, and pilgrimage circuits, thereby linking remote regions to income generation.
Third, international tourism serves as an efficient source of foreign exchange, with visitor
spending functioning as an export consumed domestically, without the logistical costs
associated with traditional goods exports.
These characteristics position tourism as a strategic sector for India. Its ability to generate
foreign exchange, create employment at scale, and support geographically distributed
development makes it an important lever for long-term economic growth.
1 World Travel & Tourism Council. 2025. “Global travel & tourism is strong despite economic headwinds”. Retrieved on March 28,2026.
https://wttc.org/news/global-travel-and-tourism-is-strong-despite-economic-headwinds
2 World Travel & Tourism Council. 2025. “Global travel & tourism is strong despite economic headwinds”. Retrieved on March 28,2026.
https://wttc.org/news/global-travel-and-tourism-is-strong-despite-economic-headwinds
3 World Travel & Tourism Council. 2025. “Global travel & tourism is strong despite economic headwinds”. Retrieved on March 28,2026.
https://wttc.org/news/global-travel-and-tourism-is-strong-despite-economic-headwinds

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 2
1.2 India’s Tourism Sector: Scale and Significance
India’s tourism sector is significant in terms of economic contribution and employment.
In FY 2023–24, the sector contributed ₹15.73 lakh crore (~USD 170 Bn
4
) to India’s GDP,
accounting for 5.22% of the total economy, and supported an estimated 84.6 million jobs
– reflecting a ~20% increase over five years.
5
Domestic tourism has been a key driver,
with 2.9 billion domestic tourist visits recorded in 2024, surpassing the pre-pandemic
peak of 2.3 billion in 2019.
6
India’s tourism assets are well recognised globally. The country has 44 UNESCO World
Heritage Sites, 106 national parks, and 18 biosphere reserves, along with established
pilgrimage and wellness tourism segments.
7

International tourism has also recovered in recent years. In 2024, India recorded
approximately 20.6 million total international tourist arrivals (including NRIs), with
international tourism receipts of approximately USD 35 billion, reflecting ~9% growth
from 2023.
8
However, it is important to note that a significant share of these arrivals
comprises Non-Resident Indians and members of the Indian diaspora visiting friends and
relatives, rather than pure leisure or business travellers. Foreign Tourist Arrivals (FTAs),
which better reflect non-diaspora travel demand, stood at 9.95 million in 2024.
9
1.3 The Gap between Potential and Performance
Despite strong fundamentals, India’s tourism outcomes remain below potential.
First, India accounts for less than 1.5% of global international tourist arrivals, significantly
lower than leading economies. While total international arrivals appear robust, the number
of foreign tourist arrivals (9.95 million in 2024), provides a more accurate reflection of
core tourism demand and remains below pre-pandemic levels, as well as substantially
lower than peer destinations such as Thailand, Malaysia, and Vietnam.
4 Press Information Bureau. 2025. Retrieved on April 19, 2026. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2171731&reg=3&lang=2
5 Ministry of Tourism. 2026. Annual Report 2025 – 26. https://tourism.gov.in/sites/default/files/2026-02/Ministry%20of%20Tourism%20
Annual%20Report_2025-26_english.pdf
6 Ministry of Tourism. 2025. India Tourism Data Compendium. https://tourism.gov.in/sites/default/files/2025-09/India%20Tourism%20
Data%20Compendium%202025.pdf
7 World Economic Forum. 2024. Travel & Tourism Development Index 2024. https://www3.weforum.org/docs/WEF_Travel_and_Tour-
ism_Development_Index_2024.pdf
8 United Nations World Tourism Organisation. Retrieved on March 28, 2026. https://www.untourism.int/tourism-data/un-tourism-tour-
ism-dashboard
9 Ministry of Tourism. 2025. India Tourism Data Compendium. https://tourism.gov.in/sites/default/files/2025-09/India%20Tourism%20
Data%20Compendium%202025.pdf

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 3
Figure 1.3: International Tourist Arrivals by Country (2024, Millions)
Second, tourism-related foreign exchange earnings remain modest relative to India’s
scale and diversity. While India recorded approximately USD 35 billion in international
tourism receipts in 2024, this remains lower than key tourism economies such as Turkey
(USD 56.3 billion), Thailand (USD 42.7 billion), and Saudi Arabia (USD 42 billion),
despite India’s wider range of cultural, natural, and experiential offerings.
Third, outbound tourism from India has grown rapidly, indicating leakage of domestic
demand. Outbound spending by Indian travellers has increased significantly, exceeding
pre-pandemic levels by approximately 15%.
10
This divergence suggests that while demand
for travel is strong, a substantial share is being met through international travel rather than
within the domestic tourism ecosystem.10 Ministry of Tourism. 2025. India Tourism Data Compendium. https://tourism.gov.in/sites/default/files/2025-09/India%20Tourism%20
Data%20Compendium%202025.pdf

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 4
These gaps point to underlying structural constraints that limit India’s ability to convert
its tourism assets and demand into realised outcomes.
This is reflected in India’s performance on global competitiveness indicators. According
to the Travel & Tourism Development Index published by the World Economic Forum,
India performs strongly on resource-based pillars, ranking 6
th
in Natural Resources and 9
th

in Cultural Resources, but lags on enabling factors such as business environment, tourist
services infrastructure, and international openness. Notably, India’s overall TTDI score in
2024 remains 2.1% below its 2019 level, indicating a deterioration in enabling conditions
even as its asset base remains globally competitive.
11
The constraint, therefore, lies not in tourism assets or underlying demand, but in the
enabling conditions required to translate these into consistent, competitive, and high-
value tourism outcomes.
1.4 Two Complementary Constraints: Demand and Supply
India’s tourism performance gap is shaped by two distinct but interrelated constraints:
the conversion of global tourism interest into actual arrivals, and the scale and quality of
on-ground tourism supply.
On the demand side, international accessibility plays a central role. Visa regimes, entry
processes, and travel facilitation influence destination choice and affect the conversion of
tourism interest into actual arrivals. These factors are particularly relevant for short-haul,
repeat, and high-value travellers. While India has expanded access through mechanisms
such as E-Visas, entry processes and policy design continue to shape inbound tourism
flows. This dimension is examined in detail in the subsequent chapter on visa reforms.
11 World Economic Forum. 2024. Travel & Tourism Development Index 2024. https://www3.weforum.org/docs/WEF_Travel_and_Tour-
ism_Development_Index_2024.pdf

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 5
On the supply side, tourism outcomes depend on the availability and quality of on-ground
infrastructure and services. Accommodation capacity, food and beverage ecosystems,
transport connectivity, and organised tour experiences determine both the attractiveness
of a destination and its ability to absorb and serve demand at scale. Without adequate
supply, even accessible destinations cannot retain tourists for longer stays or attract the
premium segments that drive high per-visitor spend.
These two dimensions are closely linked. Improvements in access conditions increase
inflows; expansion of supply improves visitor experience and spending outcomes.
Addressing India’s tourism gap requires coordinated action across both dimensions, but
through distinct and complementary policy levers.
1.5 Investment as the Central Driver of Tourism Supply
Tourism supply is investment-led. Accommodation, food and beverage services, transport
infrastructure, and curated experiences require sustained capital deployment across the
value chain. The scale, quality, and depth of a destination’s supply base are therefore
directly linked to the level of investment it attracts.
The realisation of India’s tourism ambitions, including the target of 100 million inbound
tourists and a USD 3 trillion tourism economy by 2047, is contingent on a significant
acceleration in tourism investment. Without adequate and timely creation of supply,
demand growth cannot be effectively absorbed or translated into higher visitor spend and
economic impact.

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 6
At present, the pace of supply creation has not kept up with demand growth. India’s
branded hotel inventory stood at ~0.2 million rooms in 2024
12
, accounting for less than
8% of the country’s estimated 2.48 million total lodging rooms.
13
While the development
pipeline of additional ~0.1 million rooms by 2030 reflects strong underlying investor
interest
14
, project execution timelines remain a key constraint. A typical hotel project
in India takes 36 to 48 months from approval to commissioning, compared to 12 to 18
months in competing ASEAN destinations.
15
This lag directly limits the speed at which
new supply can be brought to market, resulting in tighter room availability and upward
pressure on tariffs relative to ASEAN peers.
16

Tourism investments are characterised by high upfront capital costs, long payback
periods, and sensitivity to project execution timelines and cost structures. At a hospitality
sector lending rate of 11–14%, each additional year of project delay materially increases
financing costs and erodes investment returns.
17
As a result, many projects that are viable
in principle become financially unviable in practice, or take so long to complete that
demand conditions have shifted by the time supply arrives.
Project timelines are shaped by multiple factors, including the processes governing
approvals, clearances, and implementation. As a result, the efficiency with which projects
move from approval to commissioning becomes a critical determinant of investment
outcomes.
Investor interest in India’s tourism sector remains strong, supported by the scale of domestic
demand and long-term growth potential. The constraint is therefore not the availability of
capital, but the conditions under which investment is undertaken, conditions that are, in
large part, determined by the regulatory environment.
1.6 Ease of Doing Business as a Critical Enabler
The conditions under which tourism investment is undertaken are shaped by the ease of
doing business in the sector. Tourism spans multiple activities, including accommodation,
food and beverage, transport, and travel services, each operating within a regulatory
framework governing land use, construction, environmental clearances, safety standards,
and business operations. These requirements are administered across Union, State, and
local levels, creating a multi-layered regulatory system.
In this context, three parameters are particularly relevant: the time required to obtain
approvals and operationalise projects, the cost of regulatory compliance, and the
predictability of processes and outcomes. Together, these factors determine how efficiently
investment can be translated into operational supply.
12 Hotelivate. 2025. “India Hospitality Trends and Opportunities”. https://www.hotelivate.com/wp-content/uploads/2025/10/TO-Oct2025.
pdf
13 Hotelivate. 2024. “Sizing Up Indian Hospitality”. Retrieved on March 29, 2026. https://www.hotelivate.com/travel-tourism/sizing-up-in-
dian-hospitality/
14 Asian Hospitality. 2025. “India’s branded hotels post 68 percent occupancy”. Retrieved on March 30, 2026. https://www.asianhospitality.
com/india-hotel-occupancy-rate-2025/
15 Hotel Investment Today. 2025. “India’s hotel supply: too little, too slow “. Retrieved on March 30, 2026. https://www.hotelinvestment -
today.com/Regions/Asia-Pacific/Indias-hotel-supply-too-little-too-slow
16 India Today. 2024. Why hotel rooms in India cost a bomb, push Indians to holiday abroad. Retrieved on April 19, 2026. https://www.
indiatoday.in/sunday-special/story/indian-hotels-more-expensive-than-resorts-tourist-destinations-abroad-room-rent-tariffs-goa-jaisalm-
er-thailand-2653524-2024-12-22
17 HVS. “Ease of Doing Business in India’s Hospitality Sector”. https://www.hvs.com/staticcontent/Image/20IndiaEaseofBusiness/
HVS-Ease-of-Doing-Business-in-Indian-Hospitality-Sector.pdf

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 7
Tourism investments are particularly sensitive to these parameters. Given the capital-
intensive nature of the sector and long payback periods, delays in project execution can
significantly increase financing costs and reduce returns. Regulatory processes that extend
approval timelines, increase compliance burden, or introduce uncertainty therefore have a
disproportionate impact on investment decisions in tourism.
This is evident in India’s performance on global tourism competitiveness indicators.
According to the Travel & Tourism Development Index 2024 published by the World
Economic Forum, India ranks 39
th
out of 119 countries, placing it below several smaller
tourism economies despite its scale and asset base.
A disaggregated view of the index shows that India underperforms on key enabling
conditions, particularly business environment and openness. This, in turn, constrains
the development of tourism infrastructure and services, resulting in a less developed
tourism ecosystem. In contrast, peer tourism economies perform better on these enabling
conditions and consequently have stronger infrastructure and service ecosystems, despite
relatively weaker resource endowments.
Figure 1.6: India’s TTDI Performance Compared to Peers (2024)
18
Improving ease of doing business can therefore directly support tourism development
by enabling faster project execution, reducing compliance costs, and improving investor
confidence across the tourism value chain.
1.7 Objective of the Report
This report examines the policy and regulatory framework shaping India’s tourism sector,
with a focus on improving international accessibility and enabling investment in tourism
infrastructure and services. It covers both entry-related policies that influence inbound
tourism flows, as well as regulatory requirements governing the establishment and
operation of tourism service providers.
18 World Economic Forum. 2024. Travel & Tourism Development Index 2024. https://www3.weforum.org/docs/WEF_Travel_and_ Tour-
ism_2023–24 financial yearDevelopment_Index_2024.pdf

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 8
The objective is to identify barriers that increase the time, cost, and complexity of travel
and doing business in tourism, and to propose actionable reforms to improve ease of travel,
simplify regulatory processes, and create a more efficient and predictable environment
for sectoral growth.
1.8 Scope of the Study
This report covers two related areas of the tourism ecosystem.
The report focuses on regulations that govern entry into the tourism industry and the day-
to-day operations of tourism service providers. The analysis covers four core sectors –
accommodation service providers, food and beverage establishments, transport operators,
and travel agencies/tour operators.
Figure 1.8: Tourism Service Providers Covered in the Report

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 9
These four sectors form the backbone of the tourism value chain and are responsible for
the bulk of economic activity generated at the destination level. The regulatory conditions
governing their establishment and operation are the primary policy lever for improving
India’s tourism supply.
1.8.1 Accommodation service providers: Accommodation units serve as a key pillar of
the tourism industry, as they account for a significant share of tourist expenditure.
The International Passenger Survey shows that ~18.2% of foreign tourist expenditure
is incurred on accommodation, higher than spending on food, transport, and travel
services.
19
Given its dominance in expenditure, accommodation plays a crucial role
in shaping tourism demand, length of stay, and local economic activity. Therefore,
regulations that affect the availability or cost of accommodation have a direct impact
on tourism revenue and jobs. This report covers enterprises engaged in providing
boarding and lodging facilities to tourists, including hotels, guest houses, homestays,
and similar accommodation units.
1.8.2 Food and beverage service providers: Businesses engaged in the preparation
and sale of food and beverages to tourists and the general public, including
restaurants, bars, and other eating establishments. F&B is the most frequent daily
touchpoint in any tourist’s experience. The quality, diversity, and accessibility of
the F&B ecosystem shapes destination perception and influences length of stay
and repeat visitation. The F&B segment is among the most labour-intensive parts
of the tourism economy and has relatively low barriers to entry and start-up costs,
making its regulatory environment especially important for inclusive growth.
1.8.3 Tourist transport operators: Enterprises providing transport services for
tourists, including local and inter-city travel to tourist destinations through buses,
taxis, tourist vehicles, and other transport modes. determines whether tourists
can actually access and move between destinations. Road transport accounts for
19 Ministry of Tourism. 2006. “International Passenger Survey”. https://tourism.gov.in/sites/default/files/2020-04/ips.pdf

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 10
approximately 87% of passenger traffic in India.
20
The availability of organised
tourist transport, from airport transfers to inter-city circuits, directly shapes the
range of destinations tourists can reach and the experience they have in transit.
1.8.4 Travel agencies and tour operators: Businesses engaged in planning,
organising, and selling travel-related services, including packaged tours, ticketing,
accommodation bookings, transport arrangements, and ancillary services such as
visa and travel facilitation. They are disproportionately local businesses, small
operators with deep destination knowledge, and their ability to formalise, scale,
and compete shapes the sophistication and depth of India’s tourism product.
The report examines visa regimes, entry processes, and travel facilitation at the national
level, given their role in shaping international tourist inflows.
1.9 Methodology and Approach
The report follows a five-step approach to identify and analyse constraints affecting
tourism outcomes:
1.9.1 Mapping the regulatory landscape: The first step involves mapping the
regulatory framework governing tourism service providers at both the Union and
state levels. This includes identifying statutes, rules, schemes, and guidelines
that impose licensing, registration, approval, and compliance requirements on
tourism-related businesses.
1.9.2 Shortlisting relevant regulations: Based on the mapping exercise, regulations
are shortlisted for their relevance to market entry and the day-to-day operations
of tourism service providers.
1.9.3 Analysing procedural and cost implications: The shortlisted regulations are
examined to identify specific provisions that increase the cost of doing business
or create procedural inefficiencies.
20 Centre for Social and Economic Progress. 2025. “The Curious Case of VKM Measurement”. https://csep.org/blog/the-curious-case-of-
vkm-measurement/#_ftn1

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 11
1.9.4 Assessing entry-related policies: The first step involves analysing visa regimes,
entry processes, and travel facilitation frameworks to understand their impact on
inbound tourism flows and international accessibility.
1.9.5 Proposing reforms: Based on the analysis of entry-related policies and regulatory
frameworks, and informed by inter-state and cross-country comparisons as
well as stakeholder consultations, the study proposes reforms to rationalise
regulatory requirements, eliminate redundant or overlapping provisions, simplify
compliance processes, and improve ease of travel.
The analysis is complemented by stakeholder consultations and comparative assessment
across states and international practices. Based on these insights, the report proposes
reforms aimed at improving ease of travel and simplifying regulatory processes to support
the growth of tourism in India.

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 12

CHAPTER 02
Current Landscape
for EoDB in Tourism

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 15
2. Current Landscape for EoDB in Tourism
2.1 Tourism Investment Lifecycle
Tourism businesses in India progress through a multi-stage lifecycle, with each stage
involving distinct regulatory interactions across multiple government authorities.
Understanding this lifecycle is essential to identifying where the regulatory burden is
most concentrated, and where reforms can have the greatest impact.
The investor journey spans four broad stages.
Stage 1 (Project Development) covers land identification, acquisition, and project
planning, along with securing initial statutory clearances that are prerequisites for any
construction activity. These include approvals such as land use change, environmental
pre-screening, airport height clearance, and state-level planning approvals.
Stage 2 (Construction) covers the process of obtaining building plan approvals,
environmental clearances, and construction-related permits that determine what can
be built and at what cost, based on norms such as FAR, ground coverage, and parking
requirements. This stage includes approvals such as building plan sanction, environmental
clearance, and key no-objection certificates.
Stage 3 (Licensing and Commissioning) covers the most compliance-intensive
phase, where operators are required to obtain a range of licences prior to commencing
operations. These include core operational licences such as food safety registration, excise
permissions, health trade approvals, fire safety certification, and pollution control consent
to operate.
Stage 4 (Operations and Compliance) covers the ongoing regulatory requirements
throughout the lifecycle of the business, including periodic renewals, inspections,
and statutory filings. This includes annual licence renewals, periodic inspections, and
continued compliance with environmental and safety regulations.
Across all four stages, investors engage with multiple departments at the Union, State,
and local levels through sequential and overlapping processes, with no single coordinating
authority. This non-integrated approach creates fragmentation across the lifecycle, with
Stage 3 being the most compliance-intensive. The cumulative impact of these interactions
ultimately determines the overall ease of establishing and operating a tourism enterprise.
2.2 The Investor Experience: Three Examples
This section maps the end-to-end investor experience across three representative tourism
segments – hotels, homestays, and tourist transport operators. It traces the sequence of
approvals, institutional touchpoints, and timelines that an investor may navigate across
the investment lifecycle, from project development and construction to licensing and
operations.
By presenting these journeys step-by-step, the section highlights the key challenges faced
by investors in navigating the investment lifecycle across sectors and states.

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 16
Example 1: Investor Journey for Hotel Development in Jaipur
01 Project Development
•The investor incorporates the company and secures a Certiﬁcate of Incorporation and
Certiﬁcate of Commencement of Business
•She completes Income Tax and GSTregistrations
•Since the hotel is located near an airport zone, she needs to obtain AAI Height
Clearance.
•She applies forConsent to Establish (CTE) from theRajasthan State Pollution Control
Board under:
i. Water (Prevention and Control of Pollution) Act, 1974
ii. Air (Prevention and Control of Pollution) Act, 1981
•She submits change of land use plans under the:
i. Rajasthan Urban Areas (Permission for Use of Land) Rules, 2012
ii. Rajasthan Land Revenue Rules, 2007
02
Construction Conditions
•Ground coverage is capped at ~40% and Floor Area Ratio (FAR) is typically ~2 in
Rajasthan, forcing the investor to build vertically to achieve the same built-up area and
increasing structural costs
•Crossing height thresholds triggers high-rise classiﬁcation, which requires:
i. Fire lifts
ii. Refuge areas
iii. Advanced ﬁre-ﬁghting systems
•She is subjected to periodic ﬁre safety, electrical, and boiler inspections; any deviation
risks rework, penalties, or stoppage
•She needs to ﬁle for Boiler Approval under the Rajasthan Boiler Rules, 1954 and DG
Set Approvalunder the Electricity Act, 2003 and CEA Regulations, 2010
•She needs to obtain multiple parallel technical approvals, each governed
separately:
i. File a Fire NOC under the Rajasthan Municipalities Act, 2009
ii. File for Lift Installation Approval under the Rajasthan Building bye-laws,
2020
iii. File for Construction Material Storage Permission under the Rajasthan
Municipalities Act, 2009
03 Licensing
•Before opening, she needs to obtain Consent to Operate (CTO) from the Rajasthan
State Pollution Control Board,where her hotel is classiﬁed into the Red, Orange, or
Green category based on size and star rating, determining inspection frequency (every
6 months to 2 years) and validity (5–15 years)
•She secures core operational licences, each from a diﬀerent authority:
i. FSSAI Licence
ii. Eating House Licence
iii. Health Trade Licence
•For revenue- generating services, she applies separately for:
i. Bar Licence (valid for only 1 year in Rajasthan, costs ₹1 –16 lakh annually)
ii. Licence under the Rajasthan Police Act, 2007
iii. Peg Measure Licence
•She needs complete labour and employee compliances:
i. EPF Registration
ii. Employee Pension Registration
iii. ESI Registration
•If applicable, she obtains a Laundry Licence under the Factories Act and applies for Star
Classiﬁcation (HRACC)
04 Operational Compliance
•Post-opening, she needs to manage continuous renewals for Fire NOCs, Bar Licence,
and CTO, each on a separate timeline
•She also remains subject to ongoing inspections across departments –pollution
control, food safety, labour, and municipal authorities

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 17
Example 2 – A Homestay Owner in Goa
03 Licensing and Commissioning
•The homeowner identiﬁes a residential property and applies for registration with
Goa’s State Department of Tourism(the registration process is governed by the Goa
Registration of Tourist Trade Act, 1982 and Rules, 1985)
•The homestay to operate within regulatory deﬁnitions of a small-scale
accommodation unit, complying with limits on the no. of rooms
•She prepares to comply with ~11 total regulatory requirementsand multiple NOCs
across departments
•The investor to obtain clearances from up to 9 diﬀerent authorities post homestay
registration, including an NOC/licence from the Gram Panchayat or Municipal Council
to operate the premises as a homestay
•Upon securing all required NOCs and approvals, the investor completes formal
registration with the Department of Tourism; the homestay is now legally
recognized as a tourism unit
•However, compliance remains multi- authority dependent, with no consolidation of
approvals and a continued dependence on local body permissions
04 Operational Compliance
•Post-registration, the homestay operator to maintain validity of all NOCs and licences
and manage renewals across multiple authorities, each with separate timelines
Example 3: A Transport Operator on the Kerala–Rajasthan Circuit
03 Licensing and Commissioning
•The transport operator needs to ensure each vehicle satisﬁes the baseline
requirements under the Motor Vehicles Act, 1988 and related rules:
i. Valid vehicle registration
ii. Fitness certiﬁcation
iii. Insurance certiﬁcation
iv. Payment of motor vehicle taxes
v. All India Tourist Permit
•The operator is regulated by both Union and State frameworks:
i. The Union government sets the legal framework for registration, permits
and inter-state movement
ii. The State transport departments administer permits, enforce
compliance, levy road-use taxes and regulate registration
•The operator to obtain an All India Tourist Permit to carry tourists across state
boundaries:
i. AITP is only valid for 90 days or multiples of 90 days, up to a
maximum of 5 years at a time, requiring operators to plan renewals
around ﬁxed permit cycles
ii. Under the 2026 amendment, the vehicle needs to start or conclude
each journey in its home state, limiting the ability to run continuous
Kerala– Rajasthan tourist circuits without returning to base
iii. A vehicle holding an AITP cannot remain outside its home state for
more than 60 days at a stretch, forcing periodic returns even when the
permit remains valid
iv. Each return and re-entry into another state may trigger fresh
compliance steps and state-level charges within the same operating
cycle where such levies continue to apply

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 18
04 Operations and Compliance
Two obligations activate during normal operations on the Kerala- Rajasthan circuit:
A. Kerala state entry tax
•Kerala continues to impose state-level tax on vehicles registered outside Kerala, even
when they hold a valid AITP, creating a parallel state-level charge on top of the national
permit regime
•Under Section 3 of the Kerala Motor Vehicles Taxation Act, 1976, an out-of-state AITP
vehicle to pay tax in Kerala from the date of entry until the end of that quarter,
increasing operating cost each time the vehicle enters Kerala
•If the vehicle returns to its home state and later re-enters Kerala, the operator may face
repeated state-level tax payments within the same operating cycle
B. Re-registration after a year in another state
•If a vehicle is kept in another state for more than 12 months, Section 47 of the Motor
Vehicles Act, 1988 triggers re-registration, even if ownership has not changed
•The operator to apply for a new registration mark in the state where the vehicle has
been kept
•The operator needs to submit 18 separate documents, obtain an NOC from the state of
origin, pay the central fee under Rule 81 of the Central Motor Vehicle Rules, 1989, and
pay motor vehicle tax to the new state, adding documentation, cost and coordination
burden
•Compliance is checked mainly through manual enforcement by state transport
authorities
2.3 Current EoDB Landscape
Ease of doing business has been a central focus of policy reform in India, with sustained
efforts to simplify regulatory processes, improve transparency, and reduce compliance
burden. In the context of tourism, these reforms are particularly important given the
sector’s dependence on multiple approvals across land use, construction, licensing, and
operations, often involving several government agencies.
At the national level, the National Single Window System (NSWS), launched in 2021,
aims to provide a unified digital interface for investors to identify and apply for approvals
across Union and State governments
21
. Complementing this, the Business Reforms Action
Plan (BRAP), administered by the Department for Promotion of Industry and Industrial
Trade (DPIIT), has created a framework to benchmark and incentivise states on regulatory
reforms, including tourism-relevant areas such as licence rationalisation, digitisation of
approvals, and reduction in compliance requirements.
22
In parallel, several states have undertaken targeted reforms that directly impact tourism
businesses. For instance, Maharashtra follows a fire NOC approval system that doesn’t
require periodic renewal
23
; Delhi eliminated police-issued eating house licences that
duplicated food safety and municipal requirements, benefiting the food and beverage
segment
24
; and Kerala has removed the requirement for Panchayat and Municipal NOCs
for homestay classification, resulting in an increase in registered homestay supply.
25

These reforms demonstrate that simplification of regulatory requirements across tourism
segments, is both feasible and impactful.
21 National Single Window System. https://www.nsws.gov.in/
22 Department for Promotion of Industry and Industrial Trade. https://eodb.dpiit.gov.in/
23 Directorate of Maharashtra Fire Services. 2014. Maharashtra renewal of fire approval from the Director, Chief Fire Officer or Nominated
Officer (p. 2). Government of Maharashtra. https://mahafireservice.gov.in/circular/Circular-MFS-Not%20Necessity%20of%20renew-
al%20of%20Fire%20Approval-30.10.2014.pdf
24 Excise and Taxation Department. (2025). Order regarding Eating House Registration and Lodging Certificate requirements (Circular
No. No. F(2)\/Ex/Policy/Misc-ll/2023-24/397-400). Government of National Capital Territory of Delhi. https://excise.delhi.gov.in/
sites/default/files/Excise/circulars-orders/8228_0.pdf
25 Department of Tourism. 2022. Order regarding no requirement of NOC from local bodies for homestay classification. (G.O.(Rt) No.
177/2022/TSM). Government of Kerala. https://www.keralatourism.org/cls/homestays/Classified_Homestay.php

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 19
Evidence from both domestic and international contexts shows that targeted regulatory
simplification can materially improve business outcomes. A study on Chicago’s licensing
framework found that simplifying restaurant licensing and removing unnecessary
licences reduced both time and costs for businesses, while also improving compliance.
26

Similarly, in India, reforms under BRAP and state-level single-window systems have led
to reductions in approval timelines and the number of touchpoints required for certain
services, particularly in hospitality and food services, contributing to greater formalisation
of businesses.
However, while the direction of reform is clear and progress is evident, the current
landscape remains uneven in its implementation across sectors and states. The extent
to which these reforms translate into a simplified and predictable regulatory experience
varies across the tourism value chain and geographies.
This variation can be attributed to three structural factors:
First, reforms introduced in individual states have not been systematically replicated,
resulting in divergent regulatory requirements and processes. Second, while digital
platforms for approvals have been introduced in several states, the level of integration
across departments remains limited, with approval processes continuing to operate
sequentially in many cases. Third, reform efforts have been concentrated in select
segments, particularly larger accommodation units, while other segments such as
homestays, food and beverage establishments, tourist transport, and tour operators have
seen relatively limited simplification.
2.4 Regulatory Landscape Across Tourism Sub Sectors and Key Constrains
The regulatory burden on tourism businesses varies across sub-sectors in both its nature
and intensity, particularly in terms of the number of approvals required and the stage of
the investment lifecycle at which they arise.
Within accommodation, hotels face the highest regulatory intensity, often requiring ~50
approvals across the lifecycle, spanning land, construction, and operations. In contrast,
homestays operate within existing residential premises and face a lower overall regulatory
load, with compliance concentrated at the point of entry through state-level registration
frameworks.
In the food and beverage segment, regulatory requirements are concentrated at the
operational stage, where establishments typically require ~30 licences across food safety,
municipal authorities, excise, and safety regulations. These are often administered by
multiple authorities with overlapping mandates.
Tourist transport operators face a relatively streamlined entry process centred around
permits and vehicle registration, but encounter ongoing complexity in operations due to
inter-state variation in permits, taxation, and compliance requirements.
Tour operators operate within a comparatively lighter but fragmented regulatory
environment, with variation across states in registration requirements, eligibility
conditions, and incentives for formalisation.
26 Molfetas, A. 2019. Business Licensing Reforms. World Bank. https://documents1.worldbank.org/curated/en/247941561971098931/pdf/
Bu siness-Licensing-Reforms-Insights-from-Selected-Country-Experiences.pdf

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 20
While the nature and intensity of regulatory requirements differ across sub-sectors, the
burden on tourism businesses is not a random accumulation of individual requirements.
Instead, four recurring categories of regulatory design issues emerge consistently across
accommodation, food and beverage, tourist transport, and tour operations, and across
stages of the investment lifecycle: restrictive standards, redundancy in approvals,
cumbersome and fragmented processes, and recurring compliance burden.
Together, these structural constraints shape the overall ease of doing business in tourism
and explain the persistence of regulatory friction despite a strong underlying asset base
and ongoing reform efforts.
2.4.1 Restrictive standards: Regulatory frameworks often impose conditions that
are not aligned with the scale, risk profile, or operating model of businesses.
This can reduce project viability, limit scalability, and create entry barriers,
particularly for smaller enterprises, without necessarily improving safety or
service quality.
2.4.2 Redundancy in approvals: Multiple authorities frequently regulate similar
aspects of business activity through parallel processes, leading to duplication
of documentation, inspections, and compliance requirements. This increases
time and cost burdens for businesses without delivering proportional gains in
regulatory oversight.
2.4.3 Cumbersome and fragmented processes: Approval processes are typically
structured in a sequential and department-specific manner, with limited
coordination across agencies. This extends timelines, reduces predictability,
and increases transaction costs, making it difficult for investors to plan and
execute projects efficiently.
2.4.4 Recurring compliance and renewal burden: Periodic renewals and ongoing
compliance requirements impose a continuous administrative burden on
businesses, often irrespective of changes in risk or operating conditions. This
results in recurring costs and effort that may not add commensurate regulatory
value, while also diverting both business and administrative capacity from
more productive activities.
The subsequent chapters examine each tourism sub-sector in detail, mapping the
regulatory requirements and analysing the issues through the lens of the four identified
categories. This is complemented by an assessment of best practices across states and
relevant international examples. Based on this analysis, the report proposes targeted
reform measures along with implementation pathways to enable a more streamlined,
consistent, and efficient regulatory framework.

CHAPTER 03
Accommodation
Service Providers

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 23
3. Accommodation Service Providers
The Ministry of Tourism defines an accommodation unit as an entity providing a room
or a group of rooms designed for lodging guests, and classifies the different offerings
into 14 categories.
27
These categories include establishments operating on commercial
tariffs and functioning as registered enterprises such as hotels, heritage hotels, and
resorts. The categories also include smaller or partially commercial units that typically
operate out of residential/non-conventional structures like homestays, houseboats, tented
accommodation and so on.
Hotels and homestays are the most prominent and growing segments of the travel
accommodation ecosystem in India. Hotels lead the market, with 26,219 units currently
registered under the National Integrated Database of the Hospitality Industry (NIDHI).
28

On the other hand, homestays have gained significant traction as an alternative, catering
to the rising demand for authentic, local travel experiences. Currently, 4,925 homestays
are registered in India.
29
Together, they generated ₹4,722 crore in sales revenue in 2024.
30
Commercial accommodation service providers (such as hotels) in India are subject to
multiple approvals under the jurisdiction of the Union, State, and Municipal authorities. At
the Union level, they may comply with regulations related to approval from the Ministry
of Tourism, star classification, environmental clearance, food safety standards, and
pollution control regulations. At the state level, they are governed by building standards
regulations, trade licensing, excise rules, and labour laws. At the municipal level, they
require multiple health trade licences for ancillary services provided within the same
premises. Currently, hotel operators are required to obtain at least 60 licences from local,
state, and central government authorities. Non-commercial units such as homestays have
simpler compliances but are still subject to restrictions such as caps on room offerings
and minimum conditions.
Many of the licences required by accommodation units involve mandatory inspections,
high-frequence renewals, and other filings and returns. These conditions can increase
compliance costs, delay the commencement or continuation of operations, and create
administrative uncertainty for operators. This highlights the need to simplify the
regulations governing accommodation units. The following reforms discuss in detail the
regulatory issues affecting such units and provide corresponding recommendations.
3.1 Issue Category: Restrictive Standards
3.1.1 Reforms: Liberalise building standards for hotels to enhance usable floor
area and reduce construction costs
Hotel development is directly shaped by building regulations, including floor area ratio
(FAR), ground coverage, parking norms, and minimum plot size requirements, which
together determine the scale and financial viability of projects. Inter-state comparison of
building regulations shows that commercial buildings, like hotels, are neither offered a
27 The 14 types of accommodation services are hotels, resorts, bed-and-breakfasts, homestays, guest houses, lodges, farm stays, heritage
properties, tented accommodations, houseboats, apartment hotels, motels, timeshare resorts, and legacy vintage properties.
28 Ministry of Tourism. 2023. Accommodation Units. National Integrated Database of Hospitality Industry. https://nidhi.tourism.gov.in/
home/page/accommodation-units
29 Ministry of Tourism. 2023. Accommodation Units. National Integrated Database of Hospitality Industry. https://nidhi.tourism.gov.in/
home/page/accommodation-units
30 Aarti, B. 2025. Homestay Market Analysis 2026. Cognitive Market Research. https://www.cognitivemarketresearch.com/homestay -
market-report

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 24
competitive floor area ratio (FAR) nor are they able to utilise the floor area effectively.
These building regulations reduce the number of hotel rooms that can be constructed on
urban plots. As a result, hotel development becomes more expensive and less responsive
to demand.
Figure 3.1.1: Comparing the Built Form of Hotels on 5,000 sqm Plots Across Jurisdictions
Low permissible ground coverage: Ground coverage dictates the maximum permissible
floor area that a building may occupy at the ground level as a proportion of the plot area.
31

Low permissible ground coverage limits the floor area that can be stacked per floor. As
a result, a developer may construct more floors to utilise the maximum permissible floor
area, resulting in slender buildings and higher construction costs. A hotel with 33,000 sqm
built-up area in Uttar Pradesh for example, requires 14 floors, whereas the same hotel will
require nine floors if constructed in Singapore. Similarly, a hotelier on a 5,000 sqm plot in
Rajasthan may construct five floors to accommodate a built-up area of 10,000 sqm. This
happens due to a ground coverage limitation of 40%, which leaves the building footprint
at 2,000 sqm. However, if there were no ground coverage limit, the building footprint
would be increased to 59% of the plot area. This will allow the hotelier to construct the
same built-up area in three to four floors.
Low Floor area ratio (FAR) limits: Floor area ratio (FAR) is the ratio of the total built-
up area to the plot area. FAR determines the maximum permissible floor area that can be
constructed on a plot.
32
FAR limits lead to two distinct challenges: First, a low base FAR
limits the number of rooms a hotel can accommodate on a plot. For instance, on a 1,000
sqm plot in Rajasthan, at a base FAR of 2, a developer can build 48 rooms. Meanwhile,
on the same plot in Odisha, a developer can build up to 120 rooms. Second, some states
permit a higher FAR on payment of a premium, raising the development cost. These
rates can range from 25% of the circle rate in Punjab to 40-80% of the circle rate in Uttar
31 Rule 2.1(aa), pg. 4, Local Self Government Department. 2019. Kerala Municipality Building Rules (S.R.O. No. 828/2019). Government
of Kerala. https://townplanning.kerala.gov.in/wp-content/uploads/2019/08/KMBR-2019.pdf
32 Rule 2(37), pg. 12, Housing and Urban Development Department. 2025. Uttar Pradesh Building Construction and Development
Byelaws. Government of Uttar Pradesh. https://www.awasbandhu.in/wp-content/themes/awasbandhu/pdf/Uttar-Pradesh-Building-By-
laws-2025_PR8_250409_184117.pdf

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 25
Pradesh. For instance, a hotel on a 2,500 sqm plot in Kanpur can build 136 rooms without
paying for FAR. Doubling the room count requires an additional payment of ₹20.7 crore
for premium FAR.
33
Parking mandates: Parking requirements prescribe the number of spaces to be provided
for parking based on the size and/or use of a building. When surface parking becomes
infeasible after meeting ground coverage and setback requirements, parking spaces may
be shifted to basements. However, basement parking significantly increases construction
costs due to excavation, structural reinforcement, waterproofing, ventilation, and fire
safety requirements. Indian hotels are required to construct a higher number of car parking
spaces compared to other countries. The hotel with a 33,000 sqm built-up area in Uttar
Pradesh requires 415 car parking spaces, whereas the same hotel will require 158 car
parking spaces if constructed in Singapore.
High minimum plot area requirements: Minimum plot area requirements prescribe the
smallest plot area on which a building may be developed based on its use. High minimum
plot area requirements increase the entry barrier for small enterprises. Budget hotels
or business hotels like Bloom Rooms aim to provide low-cost options in city centres
and have constructed hotels on plots less than 500 sqm. This norm might force budget
hotels to build away from city centres, effectively losing their competitive advantage and
reducing budget-friendly options for regular business travellers.
Minimum road width requirements: Minimum road width requirements prescribe
the width of the road abutting a plot that is required for a building to be permitted for
construction. High minimum road width restrictions create entry barriers for small
developers, as they render a large share of existing plots non-developable in the urban
core areas where road networks are narrow. For context, 80% of roads in Indian urban
areas are less than 8 m wide. Therefore, mandating higher road width requirements can
hinder planned development by making it more challenging to meet these standards.
High-rise threshold: The high-rise threshold prescribes the maximum height beyond
which a building is classified as a high-rise building. Once this threshold is exceeded,
additional fire and life safety compliance is required. These compliances include
installation of fire lifts, refuge areas, enhanced stair pressurisation, and specialised fire-
fighting systems, as well as additional approvals from fire authorities. For instance, the
high-rise threshold is 15 meters in Kerala, and 32 meters in Maharashtra (Mumbai). A
hotel standing at 16 meters in height in Kerala will require the installation of a first aid
hose reel. However, the same hotel in Maharashtra would not require these installations.
Therefore, hotels incur higher construction costs and approval timelines when they cross
these high-rise thresholds, disincentivising vertical development.
33 Calculations based on the circle rate of Rs 1,38,000/sqm in Sadar Pratham, Kanpur. https://igrsup.gov.in/igrsup/getUploadRateListDoc-
ForUsecompareda r#

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 26
RECOMMENDATIONS
●Remove ground coverage requirements to allow maximum use of plot area for
construction after meeting other mandatory requirements, such as setbacks,
parking, and open space requirements, as is the case in states like Andhra Pradesh,
Odisha, Maharashtra, Telangana, and Uttar Pradesh.
●Increase base FAR limits to 1-4 FAR on roads up to 18 m wide, and 5-7 FAR
on roads over 18 m wide, in states where current limits are lower, and consider
further liberalisation, subject to geographic, seismic, and environmental factors.
●Rationalise the car parking space requirements for hotels to fall within a range
of 1.33 to 1.5 equivalent car parking spaces, in line with best practices followed
across the country.
●Remove the minimum plot area requirements for low-rise hotels, as is the case in
states like Haryana, Odisha, and Tamil Nadu.
●Reduce the minimum road width requirements for hotels to 9 m, as is the case in
states like Maharashtra, Odisha, and Tamil Nadu, subject to geographic, seismic,
and environmental factors.
●Increase the high-rise threshold to 23 m in states where the threshold is lower
to permit hotels to be constructed on higher floors without the imposition of
additional compliance requirements, subject to geographic, seismic, and
environmental factors.
Rationale
Ground coverage restrictions aim to limit the building footprint to facilitate groundwater
recharge. However, such restrictions can constrain building footprint even where
alternative, performance-based solutions are available to meet the same objectives.
34

New technological developments in the field of rainwater harvesting now allow recharge
objectives to be achieved more effectively without sacrificing productive land. For
instance, in Meghalaya, all hotels are mandated to install a rainwater harvesting structure.
States like Andhra Pradesh, Odisha, Maharashtra, Telangana, and Uttar Pradesh do not
mandate a strict cap on ground coverage. Instead, owners can utilise the plot area left
after ensuring other open space standards in these states as a building footprint. Ground
coverage restrictions may also be redundant given that other standards already determine
a building’s-built form and density.
35
Standards like setbacks, open space norms, and
parking already limit a building’s footprint. Removing ground coverage requirements can
ensure the utilisation of land that is neither used for construction nor to comply with any
other standard.
FAR limits can reduce the built-up area of a hotel, directly impacting the number of
rooms that a developer can build. This caps operational capacity and reduces revenue
potential, particularly in high-demand locations where vertical development is necessary
to achieve financial viability. When base FAR is low, developers are compelled to purchase
premium FAR to achieve commercially viable hotel sizes. Since premium charges are
often linked to the circle rate/notified land value, small players can incur substantial
34 Patel, B., Byahut, S., & Bhatha, B. 2018. Building regulations are a barrier to affordable housing in Indian cities: The case of Ahmedabad.
Journal of Housing and the Built Environment. 33(1), 175–195. https://doi.org/10.1007/s10901-017-9552-7
35 Patel, B., Byahut, S., & Bhatha, B. 2018. Building regulations are a barrier to affordable housing in Indian cities: The case of Ahmedabad.
Journal of Housing and the Built Environment, 33(1), 175–195. https://doi.org/10.1007/s10901-017-9552-7

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 27
upfront development costs. Indian states offer low FAR to hotels compared to other Asian
jurisdictions. On average, Indian states allow an FAR of 2 to 4 on narrow roads. Hotels
are offered an FAR of up to 7, but only if they abut roads that are highway-width. In
contrast, Singapore and the Philippines offer an FAR of up to 11. A few states prescribe
a higher base FAR for hotels that align with the above-mentioned recommendations. For
instance, Odisha allows a base FAR between 1.5 and 5 based on the abutting road width.
Similarly, Tamil Nadu and Punjab allow base FAR as high as 3.25 and 3, respectively.
Parking mandates may be contributing to congestion, although they were instituted
to alleviate crowding. Mandated parking incentivises more cars on the road. However,
road infrastructure cannot be rapidly expanded to keep pace. This mismatch could
exacerbate congestion and negatively impact central business districts, undercutting the
economic advantages of high density.
36
At the same time, parking mandates discourage
compact, high-density development that encourages shorter commute times for workers
and reduces transport costs.
37
Other states prescribe lower car parking requirements for
hotels. Uttar Pradesh requires 1.25 equivalent car spaces (ECS) per 100 sqm of floor area.
Odisha mandates 1.33 ECS per 100 sqm of built-up area. Maharashtra adopts a staggered
approach, requiring no parking for the first 50 sqm of floor area, 2.5 ECS per 100 sqm up
to 800 sqm, and 1.25 ECS per 80 sqm of floor area thereafter.
Reducing the minimum plot size requirement promotes affordability and grants
flexibility to a small enterprise to construct the premises on a relatively smaller piece of
land, depending on its requirements. Haryana and Odisha do not mandate a minimum plot
area requirement for hotels. Tamil Nadu mandates a minimum plot area of 50-200 sqm
for low-rise hotels.
High road width requirements restrict hotel development to a limited number of roads.
For context, 80% of Indian city roads are under 8 m wide.
38
In these cities, internal roads
within the city are narrower.
39
As a result, high minimum road widths push new hotels
away from cities’ cores toward peripheral sites where wider roads are available. However,
such sites require visitors to travel longer distances away from high-footfall commercial
areas. In Odisha, hotels under 15 m are allowed on 9 m wide roads, and buildings over
15 m are permitted on 12 m wide roads. In Tamil Nadu, hotels under 18.3 m are allowed
on 9 m wide roads, and buildings over 18.3 m are permitted on 12 m wide roads in non-
CBD areas. In Maharashtra (outside Mumbai), hotels are permitted on 9 m wide roads in
congested areas, and on 12 m wide roads in non-congested areas.
A lower height threshold increases the cost of construction and operation by increasing
the compliance requirements. Advanced technological solutions and new construction
methods, such as prefabricated components, flexible materials, and seismic-resistant
techniques, have improved the safety and feasibility of high-rise buildings. Maharashtra
(within Mumbai) defines high-rise buildings as those exceeding 32 m in height. Other states,
36 Manville, M., & Shoup, D. 2018. People, Parking and Cities. Journal of Urban Planning and Development, 131, 233–245. https://doi.
org/10.1061/(ASCE)0733-9488(2005)131:4(233)
37 Ministry of Urban Development. 2015. Urban and Regional Development Plans Formulation and Implementation Guidelines Volume 1.
Government of India. https://mohua.gov.in/upload/uploadfiles/files/URDPFI%20Guidelines%20Vol%20I%282%29.pdf
38 Sholmo, A., Lamson-Hall, P., Madrid, M., M. Blei, A., Parent, J., Sanchez, N. G., & Thom, K. 2016. Atlas of Urban Expansion: The 2016
Edition, Volume 2: Blocks and Roads. Lincoln Institute of Land Policy. https://www.lincolninst.edu/app/uploads/legacy-files/pubfiles/
atlas-of-urban-expansion-2016-volume-2-full.pdf
39 Brush, J. E. 1962. The morphology of Indian cities. India’s Urban Future, 1. https://shekhar.cc/wp-content/uploads/2017/05/brush_mor-
phology.pdf

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 28
such as Karnataka and Maharashtra (outside Mumbai), define them as those exceeding 24
meters in height, while Punjab sets the high-rise threshold at 21 meters. Reliance on height-
based controls as the primary tool for fire safety compliance can increase construction
costs. Instead, enhanced fire response capacity can support a calibrated increase in high-
rise thresholds while maintaining overall fire safety. Strengthening fire services through
improved equipment, upgraded firefighting infrastructure, and higher-reach response
systems would allow safety objectives to be met without imposing disproportionate
additional compliance costs.
Implementation Roadmap
Local Self Government Department/ Urban Affairs Department/ Urban Development and
Housing (UDH) Department under the State government may amend Municipal Building
Regulations/ Building Byelaws/ Model Building Regulations at the State-level.
3.1.2 Reform: Introduce a system of environmental reclassification for
accommodation units
Background
The Central Pollution Control Board (CPCB) classifies industrial sectors into categories
based on a pollution index.
40
The classification links each category to different approval
and inspection requirements. Industries are grouped into red, orange, green, white, and
blue categories. Red, orange, and green category units receive Consent to Operate (CTO)
for up to 5, 10, and 15 years, respectively. The white category includes sectors with low
pollution potential that may be exempt from routine clearances. The inspection frequency
across all categories ranges from once every six months to once every two years.
Category Consent to Operate (CTO) Validity Inspection Frequency
Red Up to 5 years At least once every 6 months
Orange Up to 10 years At least once every year
Green Up to 15 years At least once every 2 years
White Not required Not specified
Blue Validity extended by 2 years over base categoryNot specified
Figure 3.1.2: CPCB Environmental Classification and Respective Compliance Requirements
Under the CPCB’s categorisation, hotels are classified by star rating, size, and fuel type. Hotels
rated three stars or higher, or with 100 or more rooms, are placed in the red category. Similar
hotels that operate on cleaner or gaseous fuels are placed in the orange category. Hotels with
up to three stars or 20 to 100 rooms fall into the orange category. Hotels with 20 or fewer
rooms are classified as green. Both the Kerala State Pollution Control Board and the Rajasthan
State Pollution Control Board follow the CPCB classification for hotels.
41

40 Central Pollution Control Board. 2025. Directions on Harmonisation of Industrial Sector Classification. https://cpcb.nic.in/openpdffile.
php?id=TGF0ZXN0RmlsZS9fMTczNzYxMzk2OV9tZWRpYXBob3RvMTEzODMucGRm
41 Kerala State Pollution Control Board. 2025. Revised List of Red Category Industries and Non-Industrial Operations. Government of
Kerala. https://kspcb.kerala.gov.in/assets/uploads/widget/circulars/Revised_categorisation_as_on_29_12_2025.pdf Rajasthan State Pol-
lution Control Board. 2020. Revised Categorisation of Industries for Consent Mechanism (No. F14/(23)Policy/RPCB/Plg).

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 29
However, state boards such as the Maharashtra State Pollution Control Board place all
hotels in the orange category regardless of size or rating.
42

In practice, there is no clear mechanism within the CPCB framework that allows an
individual hotel to seek reclassification to a lower-risk category by demonstrating that its
actual pollution levels are lower than the sector average. While the framework provides
risk-based classification and enables periodic inspections, it does not prescribe a unit-
level methodology for PI recalculation or category change. As a result, hotels that invest in
cleaner technologies do not have a formal pathway to align their regulatory classification
with their actual environmental performance.
RECOMMENDATION
●Introduce an environmental reclassification framework for hotels, based on
pollution outcomes.
Rationale
Currently, CPCB classifies hotels into different colour categories based on sector-level
assessment. Individual hotels within a category are regulated uniformly, irrespective of
their energy use, technologies, or waste generation. However, the environmental impact
of hotels depends on a variety of factors, including their use of technology. A study by
the Government of India, through Bureau of Energy Efficiency (BEE) and USAID, on
the hotel industry in India, found that a 5-star hotel has lower emissions per square meter
than a 4-star hotel, reflected by its ability to invest in newer and greener technologies.
43
International practice shows that environmental performance assessment conducted
by accredited third parties supports risk-based regulation and improves compliance.
Independent verification mechanisms strengthen compliance by basing it on verified,
measurable performance.
44
This can ensure oversight toward high-polluting operators and
ease routine requirements for low-impact and compliant operators.
45

Implementation Roadmap
Central Pollution Control Boards (CPCB) and State Pollution Control Boards (SPCBs)
may institute a CPCB notified environmental reclassification framework for hotels and
other accommodation service providers.
3.1.3 Raise the cap on the number of rooms that can be offered by homestay units
Background
State tourism departments limit the number of rooms permitted for homestays in registration
and operational rules. In Kerala, under the Guidelines notified for the Classification and
Reclassification of Homestay Units, the maximum number of rooms that can be given for
tourist accommodation is 6.
46

42 Maharashtra State Pollution Control Board, Consent Management – Categorisation of Industries (R/O/G): List of Industries under ‘RED’
Category. https://mpcb.glack ov.in/consent-management/rog
43 Balance & United States Agency for International Development. 2011. An overview of Carbon Emissions, Mitigation opportunities of the
Hotel Industry in India. https://cbalance.in/wp-content/uploads/2013/01/CB_ECO3_White-paper_Hotel-Industry-March28-2012_v2.pdf
44 World Bank. 2019. State and trends of carbon pricing 2019. World Bank Group. https://openknowledge.worldbank.org/handle/10986/31755
45 Molfetas, A., & Martin, I. 2022. Risk-based approaches to environmental licensing. World Bank. https://documents1.worldbank.org/
curated/en/099051123160521750/pdf/P178189078a42d0f4087170e8b5c8f3080b.pdf
46 Government of Kerala. (2020). Homestay Classification/Reclassification Scheme (No. GO-MS-No-03-2020-TSM-16012020-1). https://
homestaykerala.org/wp-content/uploads/GO-MS-No-03-2020-TSM-16012020-1.pdf

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 30
Uttar Pradesh, vide a government order, passed under the new Uttar Pradesh Bed &
Breakfast and Homestay Policy-2025. Under this policy, ‘homestay’ has been defined as
having a maximum of 6 rooms.
47
Similarly, in Rajasthan, homestays are regulated under the schemes notified under the
Rajasthan Tourism Trade (Facilitation and Regulation) Act, 2010.
48
Section 5 under the
Rajasthan Homestay (Paying Guest House) Scheme restricts the maximum number of
rooms to five.
49
RECOMMENDATION
●Raise the cap on the number of rooms that can be offered by homestay units
from 6 rooms to 9 rooms.
Rationale
Room caps on homestays function as a quantity restriction. They limit the supply that
a compliant operator can offer, even where demand exists. Accommodation providers
require a minimum scale to cover fixed costs such as utilities, maintenance, and regulatory
compliance, and economies of scale are a key determinant of profitability in the hospitality
sector.
50
Limits on supply therefore affect viability and discourage expansion.
A revised cap of up to 9 rooms preserves the conceptual distinction between a homestay and
a commercial guest house. The proposed increase does not alter the essential character of
a homestay as a small-scale, owner-operated accommodation model. Beyond a specified
threshold, establishments may fall under the regulations applicable to guest houses or
small hotels and be subject to a different compliance framework. Setting the cap at up
to 9 rooms therefore provides limited expansion flexibility while maintaining regulatory
clarity and preventing category dilution. For instance, Rajasthan introduced the Tourism
Guest House Scheme, 2020, to allow Guest Houses to offer up to 20 lettable rooms.
51
Implementation Roadmap
Department of Tourism under the State government may amend the guidelines for the
classification/reclassification of homestays to increase the permissible number of rooms
for a homestay from 6 to 9.
47 Government of Uttar Pradesh. 2025. Uttar Pradesh Bed & Breakfast and Homestay Policy—2025 (No. 308/2025/41-2-2025/03/2025-
CN-1894113). https://up-tourismportal.in/pdf/GOHome_Stay.pdf
48 Department of Tourism. 2010. Rajasthan Tourism Trade (Facilitation and Regulation) Act, 2010 (Notification No. No. F8 (42) Trade/
DT/09/3116). Goverflexibility for expansionnment of Rajasthan. https://www.tourism.rajasthan.gov.in/content/dam/rajasthan-tourism/
english/pdf/acts-and-policy/16-Rajasthan-Tourism-Trade-Rules,-2010-and--Notifications_Other-Notifications.pdf
49 Department of Tourism. 2021. Rajasthan Homestay (Paying Guest House) Scheme, 2021 (No. No. 11530). Government of Rajasthan.
https://istart.rajasthan.gov.in/public/Policies/rajasthan-homestay-pg-house-scheme-2021.pdf
50 Gu, Z. 2005. Economies of Scale Could Be Key to Profitability. International Journal of Hospitality & Tourism Administration. https://
doi.org/10.1300/J149v06n01_05
51 Section 1, pg. 1. Department of Tourism. Rajasthan Guest House Scheme, 2020. Government of Rajasthan. https://istart.rajasthan.gov.
in/public/Policies/rajasthan-guest-house-scheme-2020.pdf

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 31
3.2 Issue Category: Redundancy in Approvals
3.2.1 Remove project-stage approval by the Ministry of Tourism and de-link star
classification of hotels from grant of any license or approval or sanction of loans
Background
The Ministry of Tourism operates a voluntary scheme for approval of Hotel projects
through its Hotel & Restaurant Approval & Classification Committee (HRACC).
52
This
framework is intended to ensure that hospitality establishments meet contemporary
standards of facilities, safety, and service quality for tourists.
53
Applications are submitted
online through the HotelCloud portal. The form requires detailed promoter documentation,
land-use permit, architectural specifications, environmental and safety features, local
body approvals/ NOC, capital structure disclosures, and projected timelines.
The approval is valid for five years and may be extended by one year. It ceases to be valid
three months prior to expiry or on the date the hotel becomes operational, whichever is
earlier. During the project implementation stage, the promoter may file online returns
showing quarterly progress in the prescribed format on the same portal, failing which
the project approval is liable to be withdrawn.
54
On completion of the Hotel Project, the
promoter may submit a completion certificate issued by the competent authority.
The Hotel and Restaurant Approval and Classification Committee (HRACC) under
the Ministry of Tourism, Government of India, lays down the guidelines for voluntary
classification/ reclassification of hotels at the project or operational stage.
55
Hotel projects
are approved under one of the star categories at the implementation stage, whereas
operational hotels are classified or reclassified after commencement of operations.
Applications are submitted online through the HotelCloud portal. Applications for 1-Star
to 3-Star categories are processed by the concerned Director at the India Tourism Office,
at the state level. Applications for the 4-Star, 5-Star, 5-Star Deluxe, and Heritage (Basic)
categories are processed at the central level, and any queries are handled by the Member
Secretary (HRACC), Ministry of Tourism. The clearance of the classification application
for hotels typically takes around 90 days, per the guidelines. This results in delays that
directly affect hotel launch schedules. The issue is further compounded by the lack of
standardised service level agreements (SLAs) and formal escalation mechanisms across
agencies.
Similarly, the Central Pollution Control Board (CPCB) assigns environmental categories
to hotels using star classification as a determining factor. Hotels rated above 3 stars or
with 100 or more rooms are placed in the Red category, while hotels up to 3 stars or
with 20 to 99 rooms are placed in the Orange category. This makes the voluntary star
classification mandatory in practice.
52 Ministry of Tourism. 2018. Revised guidelines for approval of hotels at project stage and star classification/reclassification of operational
hotels. Government of India. https://nidhi.tourism.gov.in/uploads/gallery/1667476361.pdf
53 Ministry of Tourism, Government of India. 2018. Guidelines for Hotel Approval & Classification Committee (HRACC). https://tourism.
gov.in/sites/default/files/2020-02/Hotel_Guidelines_From%2019-01-2018.pdf
54 Ministry of Tourism, Government of India. 2023. Guidelines for hotel project approval and classification (1667476361.pdf). https://
tourism. gov.in/sites/default/files/2024-02/1667476361.pdf
55 Ministry of Tourism. 2018. Revised guidelines for approval of hotels at project stage and star classification/reclassification of operational
hotels. Government of India. https://nidhi.tourism.gov.in/uploads/gallery/1667476361.pdf

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 32
Although the star classification is voluntary for hotels, it is considered mandatory for
them to serve Indian liquor and foreign liquor to residents. State excise departments
grant licences to hotels that hold a star classification. Star classification also serves as the
primary basis for deciding the liquor license fee. For example, the Delhi Excise Rules,
2010 set the fee for a bar license for serving Indian Liquor inside a bar/restaurant attached
to a hotel between ₹4 lakhs to ₹12 lakhs, based on the star classification.
RECOMMENDATIONS
●Remove project-stage approval for hotels by the Ministry of Tourism. Retain
only the post-construction star classification of hotels.
●Ministry of Tourism may issue appropriate communication to clarify that
star classification is a voluntary quality benchmark and may not be used as
a basis for granting any other license, approval or regulatory permission or
sanction of loans etc.
Rationale
The purpose of star classification is to denote the size of the hotel and the amenities it
provides. The project stage approval and post-construction star classification serve the
same objective of classifying hotels into star categories. At the project stage, the promoter
declares the intended star category and submits plans to demonstrate compliance with
room size norms, amenities, eco features and safety standards. After the hotel becomes
operational, the promoter may apply again for star classification within three months, and
the Ministry reassesses substantially the same parameters in built form. This results in the
same standards being examined twice, first on paper and then on site. Further, since other
approvals (such as environmental clearance, health trade licence, excise licence, and so
on) are contingent on star classification, what began as a voluntary process, has de facto
become a mandatory approval.
The linkage of star classification with license eligibility creates a bottleneck that could
delay hotel operations without any clear policy benefit. The classification can take several
months to process through HRACC’s system. This delay leads to postponing revenue
streams from food and beverage services and undermines business competitiveness.
Over time, since other approvals (such as environmental clearance, health trade licence,
excise licence, financial loan sanctions and so on) are contingent on star classification,
what began as a voluntary process for project stage approval has de facto become a
mandatory approval.
Star classification may be delinked from CPCB categorisation because it does not
necessarily reflect a hotel’s environmental impact. A study on the Indian hotel sector
found wide variation in energy use and emissions even among hotels within the same star
category.
56
For example, a five-star hotel in warm and humid region, emits much more
CO2 per square meter than a five-star hotel located in cold region.
Making star classification mandatory in the case of liquor licensing runs counter to the
voluntary intent of the starrating scheme. The Ministry of Tourism guidelines emphasise
that classification is optional and primarily for marketing and service benchmarking, yet
56 Balance & United States Agency for International Development. 2011. An overview of Carbon Emissions, Mitigation opportunities of the
Hotel Industry in India. https://cbalance.in/wp-content/uploads/2013/01/CB_ECO3_White-paper_Hotel-Industry-March28-2012 v2.pdf

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 33
state excise laws bind it to alcoholsale permissions that are economically significant for
hospitality businesses. Removing this linkage, or at least allowing provisional star ratings
for licensing purposes, would align excise regulation with the voluntary nature of the
classification regime, reduce unnecessary delays, and enable hotels to begin operations
and generate employment and revenue without being held up by noncore procedural
requirements. FSSAI removed the similar star classification requirement, which was
earlier required to grant a fresh license/renewal to Hotel Food Business Operators (FBOs).
BEST PRACTICE | New Zealand
Internationally, star classification is managed by an official national tourism
authority or a recognised board that sets quality standards and issues ratings based
on published criteria. For example, in New Zealand, accommodation star-rating
is administered by ‘Qualmark’, a government owned organisation under Tourism
New Zealand. It functions as New Zealand’s official star classification board
for hotels and tourism quality standards. It sets assessment criteria, evaluates
properties (including facilities, safety, sustainability and service), and awards star
ratings to accommodation service providers.
Implementation Roadmap
(i) Acting on above recommendations, the Ministry of Tourism has issued necessary
instructions to remove project-stage approval for hotels.
(ii) Ministry of Tourism has also issued instructions to states not to base any license,
approvals or financial loan sanctions on this project-stage approval for hotels.
(iii) Ministry of Tourism has also clarified that star classification may be delinked
from regulatory approvals and fiscal incentives. [(i), (ii) & (iii) above, Ref. QS-
10/68/2025-Q&S Division dated 16.03.2026, Ministry of Tourism].
(iv) Central Pollution Control Board, Ministry of Environment, Forest and Climate
Change may modify Central Pollution Control Board classification guidelines, and
all other relevant rules, orders and notifications to remove any reference to star
classification as a criterion for environmental approval or regulatory categorisation.
(v) Excise Departments under the State government may modify Excise Rules and all other
relevant rules, orders and notifications to remove any reference to star classification as a
criterion for license eligibility, fee determination or regulatory categorisation.
3.2.2 Reform: Introduce a single Health Trade License for hotels for all ancillary services
Issue
Hotels may obtain a separate license for each ancillary service provided on their premises.
For instance, a hotel or resort in Mumbai with a banquet hall, laundry or beauty salon,
may obtain separate health trade licences for each of these services. This requirement
arises under Section 394 of the Mumbai Municipal Corporation Act, 1888, read with
Schedule of License Fees and Rules (Schedule M)
57
.
57 Government of Maharashtra. 1888. The Mumbai Municipal Corporation Act, 1888 [PDF]. https://www.indiacode.nic.in/ bit-
stream/123456789/16119/1/the_mumbai_municipal_corporation_act.pdf

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 34
Service Type Licence Fee (₹, subject to maximum)Validity Period
Banquet Hall / Restaurant /
Catering
47,320 1 year
Beauty Salon 3,590 1 year
Laundry Service / Shop 47,320 1 year
Lodging House 28,560 1 year
Figure 3.2.2: Types of Health Trade Licence (Health Trade Licence) for Hotels in Mumbai
58
:
RECOMMENDATION
●Introduce a single, Health Trade License that subsumes separate licences for
hotels to be issued by the local municipal corporation/ municipality.
Rationale
The requirement to obtain separate licences for each ancillary service within the same
premises results in duplication and higher compliance costs. Hotels are treated as multiple
independent establishments for licensing purposes, even when ancillary services such as
spas, swimming pools, banquet halls, and bars operate within a single business unit under
common ownership.
The overlapping licensing structure is also inconsistent with the objective of ease of doing
business and regulatory simplification. The Business Reforms Action Plan (BRAP) of
the Department for Promotion of Industry and Internal Trade (DPIIT) explicitly calls
for simplification of trade licences, reduction of documentation, and elimination of
overlapping approvals.
59
Implementation Roadmap
Local Self-Government Department (LSGD)/ Urban Development Department/ Municipal
Administration and Water Supply Department (MAWS) under the State government may
introduce a single, Health Trade License that subsumes separate licences for ancillary
services for hotels.
3.2.3 Reform: Introduce a single liquor license for hotels for service areas within the
same premises
Background
Hotels require multiple liquor licences for serving liquor within the same hotel premises.
When a hotel holds a valid liquor license to operate a bar, it cannot serve liquor in
guest rooms or in other areas such as poolside spaces, terraces, lawns, or at banquets.
These locations need to be separately authorised under an additional liquor license, in
accordance with the applicable state excise rules. For instance, in Delhi, Section 81 of
the Delhi Excise Act, 2009, governs the government’s rule-making power regarding the
58 ps://portal.mcgm.gov.in/irj/go/km/docs/documents/CBA/Trade/Fee%20Schedule%20of%20394.pdf
59 Department for Promotion of Industry and Internal Trade. 2024. Business Reforms Action Plan (BRAP) 2024 [PDF]. Government of
India. https://eodb.dpiit.gov.in/PublicDoc/Download/n1oGktz5P6kwxWdvTViC9w_eee__eee

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 35
wholesale or retail sale of intoxicants.
60
Under the Act, the Delhi Excise Rules, 2010
prescribe that an L-16/L-16F license permits the sale and consumption of liquor only
within the approved bar or restaurant space inside the hotel, and nowhere else. If the
hotel wants to serve liquor inside guest rooms, it may separately obtain an L-15/ L- 15F
license, which is meant for serving liquor to resident guests in their rooms.
61
For a 3-star
hotel in Delhi, the annual L-16/L-16F licence (for serving liquor in the bar/restaurant)
costs ₹18,04,598 for up to 75 seats. If the hotel also wants to serve liquor in guest rooms,
it may take a separate L-15/L-15F licence, which costs ₹6,27,686 annually, for a hotel
with 51–100 rooms.
62
Similarly, in Himachal Pradesh, different areas of service within a
hotel (such as lawns, terrace, banquet hall) require different/additional licences, based on
the Himachal Pradesh Excise Act.
63

RECOMMENDATION
●Introduce a single liquor license for hotels for service areas within the same
premises.
Rationale
In the case of liquor licensing, separate licences for different service areas within the same
hotel premises create operational rigidity and can restrict service flexibility. Multiple
licences for similar services increase documentation requirements, inspection frequency,
license fees, and renewal timeline for a hotel business.
BEST PRACTICE | New Delhi
The Expert Committee on Excise Reforms (2020) under the Government of NCT
of Delhi recommended abolishing multiple existing retail license categories and
replacing them with a single retail license category for simplification of retail
liquor licences.

Implementation Roadmap
Excise Department under the State government may amend the Excise Act and Rules at
the State level to introduce a single liquor license for hotels, for service areas within the
same premises.
3.2.4 Reform: Remove the requirement to obtain local authority NOCs for homestay
registration
Background
Homestays need to be registered with the department of tourism, under the state government.
Homestay operators are required to secure multiple approvals before commencing
operations, including around 5 No Objection Certificates (NOCs) and 11 total compliance
60 Delhi Excise Act, No. XIII of 2009. 2009. Government of NCT of Delhi. https://www.indiacode.nic.in/bitstream/123456789/13622/1/
delhi_excise_act.pdf
61 https://excise.delhi.gov.in/excise/grant-l-15l-16-license
62 Department of Excise, Entertainment & Luxury Tax, Government of NCT of Delhi. 2025. L-15 and L-16 licences (fee structure and
conditions). https://excise.delhi.gov.in/excise/l15-and-l16
63 The Himachal Pradesh Excise Act, 2011. 2011. Government of Himachal Pradesh. https://www.indiacode.nic.in/bit-
stream/123456789/3304/1/THE%20HIMACHAL%20PRADESH%20EXCISE%20ACT%2C%202011.pdf

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 36
requirements from various government authorities.
64
For example, Meghalaya mandated
all accommodation providers (including homestays) to obtain a No Objection Certificate
(NOC) from both the district administration and district police.
65
Similarly, as per the Goa
Registration of Tourist Trade Act, 1982 and Rules, 1985, a homestay registration in Goa
can trigger clearances from up to nine different authorities, apart from the registration
with the tourism department.
66
Among these, homestay operators are often required to
obtain a license/NOC of the Gram Panchayat/Municipal Council to run the premises as
a homestay.
RECOMMENDATION
●Remove the requirement for an NOC from Municipality or Panchayat to
register a homestay.
Rationale
The requirement for homestay operators to obtain NOCs from multiple authorities can
create administrative hurdles and delays in the registration process. To address this, Kerala
removed the requirement of NOC from Panchayat/ Municipality/ Corporation for the
classification of homestays.
67
As per the Government Order (G.O.), the NOC requirement
in Kerala was removed after the difficulties faced by homestay owners were examined.
The local municipalities/ panchayats of the state have also expressed the view that the
requirement to submit a No Objection Certificate for homestay classification may be
removed.
BEST PRACTICE | Kerala
The Government of Kerala removed the requirement of NOC from Panchayat/
Municipality/ Corporation for the classification of homestays
68
. As per the
Government Order (G.O.), the NOC requirement in Kerala was removed after the
difficulties faced by homestay owners were examined. The local municipalities/
panchayats of the state have also expressed the view that the requirement to
submit a No Objection Certificate for homestay classification may be removed.
Implementation Roadmap
(i) Department of Tourism under the State government may remove the requirement for
an NOC from Municipality or Panchayat to register a homestay.
(ii) Department of Tourism under the State government may introduce self-registration
of homestays.
64 Expert Committee on Reforms in Liquor Trade, Government of NCT of Delhi. (n.d.). Report of the Expert Committee suggesting
measures for various reforms in liquor trade in Delhi [PDF]. https://excise.delhi.gov.in/sites/default/files/important-news/report_of_ex-
pert_committee_suggesting_measures_for_various_reforms_in_liquor_trade_in_delhi.pdf
65 Directorate of Tourism. 2025. Online Data Collection and No Objection Certificate for registration of Homestay/Guest House/Lodge/
Inn. (Press Release No. No. M/D-Tour. 15/2023/Pt/40). Government of Meghalaya. https://cdn.s3waas.gov.in/s32a084e55c87b1ebc-
daad1f62fdbbac8e/ uploads/2025/07/17537762994877.pdf
66 Department of Tourism. 2022. Revised documents for New Registrations/Renewal (Government Order No. No. NS/3(865)2022-DT/|2G).
https://goatourism.gov.in/wp-content/uploads/2018/12/Ease-of-Doing-Business-EoDB-order.pdf
67 Department of Tourism. 2022.Order regarding no requirement of NOC from local bodies for homestay classification. (G.O.(Rt)
No.177/2022/TSM). Government of Kerala. https://www.keralatourism.org/cls/homestays/Classified_Homestay.php
68 Department of Tourism. 2022.Order regarding no requirement of NOC from local bodies for homestay classification. (G.O.(Rt)
No.177/2022/TSM). Government of Kerala. https://www.keralatourism.org/cls/homestays/Classified_Homestay.php

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 37
3.3 Issue Category: Cumbersome and Fragmented Approval Process
3.3.1 Reform: Adopt Auto-DCR scrutiny and integrate departmental NOCs into
the building permit portal
Background
Pre-DCR is a pre-submission validation step within the process of building plan approval.
It is a desktop tool or plugin used on computers to prepare and pre-check building drawings
before submitting them for approvals. Pre-DCR ensures that drawings are correctly
formatted and broadly compliant, so that only valid plans are submitted for scrutiny.
For example, Meghalaya’s Online Building Permission System (OBPS) operates under
Meghalaya Urban Areas Building Bye-Laws, 2021.
69
It relies on portal-based Electronic
Development Control Regulation (EDCR) scrutiny after uploading drawings. However, it
does not have a pre-DCR validation tool/plugin to pre-check drawings.
70
In practice, architects may rely on repeated EDCR uploads to identify errors and then
resubmit until approval. Meghalaya’s OBPS documentation focuses on electronic plan
submission and EDCR scrutiny but does not reference integration of multi-agency NOC
clearances within the same portal workflow in official toolkit documents. In Kerala,
under the K-SMART platform, the applicant/architect prepares drawings manually using
published guidelines and uploads them directly.
71
It does not have a formal Pre-DCR desktop
plugin/tool that architects run before upload, as seen in Auto-DCR implementations.
K-SMART also does not currently provide an end-to-end, API-linked automated NOC
clearance module with other departments (e.g., fire, environment, transport, utilities)
within the same permit workflow. Sections 381-388, 565 of The Kerala Municipality Act,
1994 govern the building rules and bye-laws, giving powers to the government. Under
this Act, the Kerala Municipality Building (Amendment) Rules, 2021, under Rule 19A
states that clearances and NOCs from any authorities concerned may be submitted along
with the application.
72
RECOMMENDATION
●Adopt Auto-DCR scrutiny for building plan approvals and integrate
departmental NOCs (such as the Public Works Department (PWD), the
Water Resources Department (WRD), and the height clearance NOC) into
the online building permit portal.
Rationale
Several processes lengthen the approval timeline and add to the operational workload
of municipal corporations/councils and town panchayats. In 2015, manual construction
permits in Delhi and Mumbai involved 24 to 44 separate procedures. On average, the
permits took 171 to 195 days to get approved.
73
69 Government of Meghalaya, Urban Affairs Department. 2021. The Meghalaya Building Bye-Laws, 2021. https://meglaw.gov.in/rules/
The_Meghalaya_Building_Bye_Laws_2021.pdf
70 Meghalaya Urban Development Authority. 2025. Toolkit / Instructions – Online Building Permission System (OBPS). https://obps.
meghalaya.gov.in/obps/instructions.htm
71 Information Kerala Mission. 2024. K-SMART modules, Government of Kerala. https://ikm.gov.in/sites/default/files/2024-04/ksmart-
modules-status-31.03.2024.pdf
72 Kerala Municipality Building (Amendment) Rules, 2021. https://www.legitquest.com/act/kerala-municipality-building-amendmen-
trules-2021/df5c
73 World Bank. 2020. From Paper to the Cloud – Improving Building Control through E-permitting. https://documents1.worldbank.org/
curated/en/705331592344507733/pdf/From-Paper-to-the-Cloud-Improving-Building-Control-through-E-permitting.pdf

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 38
Automated permitting systems improve processing efficiency and reduce approval
delays. The introduction of e-permitting systems in 2020 reduced delays with approval
processes taking around 113 days in Delhi and 98 days in Mumbai.
74
Similarly, Chennai
Metropolitan Development Authority (CMDA) has adopted an automated building plan
approval system.
75
Applicants upload building plans and supporting documents through
an online portal. The auto-DCR software verifies the technical compliance of the plans
with development and building regulations.
Auto-DCR (Automated Development Control Regulations) is a software application that
automatically checks whether a building plan complies with applicable Development
Control Regulations, such as building height, setbacks, floor area, parking and safety
requirements. Auto-DCR provides a Pre-DCR validation tool as part of its workflow
process. It is a software application that architects can run on their computers as a plugin
to prepare and pre-check the building plan drawings. It allows errors to be corrected
before upload and significantly reduces rejections. Architects first prepare and validate
their drawings using the Pre-DCR tool, ensuring only compliant plans can be uploaded
for automated scrutiny in the online planning permission system.
BEST PRACTICE | Chennai
CMDA’s Online Planning Permission Application (Online PPA) system explicitly
states that NOC integration for 10 departments, where applicants can initiate,
track, and receive clearances from external NOC-issuing departments, is part of
the same online planning permission process.
76
The list of integrated departments
includes the Forest Department, Public Works Department, Southern Railways,
Chennai Metro Rail Ltd, and more. CMDA granted 792 online approvals in 2025
alone, reflecting the scale of usage of its Auto-DCR-enabled Online PPA system.
77
Implementation Roadmap
Local Self-Government Department (LSGD)/ Urban Development Department/ Municipal
Administration and Water Supply Department (MAWS) under the State government may
adopt Auto-DCR software for building plan approvals and integrate departmental NOCs
in a single online portal.
74 World Bank. 2020. From Paper to the Cloud – Improving Building Control through E-permitting. https://documents1.worldbank.org/
curated/en/705331592344507733/pdf/From-Paper-to-the-Cloud-Improving-Building-Control-through-E-permitting.pdf
75 Chennai Metropolitan Development Authority. 2021. PreDCR Help Manual. Government of Tamil Nadu. https://onlineppacmda.tn.gov.
in/BPAMS.Common/Downloads/CMDA/PreDCRManual.pdf
76 Chennai Metropolitan Development Authority. (Retrieved in 2025). NOC Integration. https://cmdachennai.gov.in/NOCIntegration.html
77 Chennai Metropolitan Development Authority. (2025). Online PPA approval details. https://www.cmdachennai.gov.in/OnlinePPAAp-
provalDetails/2025.html

CHAPTER 04
Food and Beverage
Service Providers

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 41
4. Food and Beverage Service Providers
The regulation of Food and Beverage (F&B) units follows a three-layered governance
structure, similar to accommodation units. At the Union level, authorities regulate food
safety, income tax, GST, imports, and registrations under the Employees’ Provident
Fund. State governments regulate areas such as excise, pollution control, fire safety, and
electricity through sector-specific laws and authorities. Municipal bodies oversee local
public health, sanitation, change of land use (CLU) approval, and entertainment licences,
among others.
F&B businesses in India may obtain several mandatory licences even to start operations,
unlike in countries such as Singapore and China. According to the National Restaurants
Association of India (NRAI), an operator requires a total of 36 approvals to open a
restaurant in Bengaluru, 26 in Delhi, and 22 in Mumbai.
78
On average, operating an F&B
unit requires obtaining at least 24 licences, registrations, and permissions across different
levels of government.
Requiring businesses to submit identical information to multiple authorities may impose
avoidable compliance burdens, particularly on small and medium-sized enterprises.
79
In
this context, this section outlines reform recommendations to streamline the licensing
framework governing Food and Beverage (F&B) service providers.
4.1 Issue Category: Recurring Compliance and Renewal Burden
4.1.1 Reform: Increase the turnover threshold and validity period for FSSAI
registration and licensing
Background
All food business operators are required to register with or obtain a license issued by the
Food Safety and Standards Authority of India (FSSAI). The power to grant registrations/
licences stems from the Food Safety Standards Act 2006 (FSS Act 2006). The FSS
(Registration and Licensing of Food Businesses) Regulations 2011 have been formulated
in pursuance of section 92(2)(o) and section 31 of the FSS Act 2006, which states that
no person can start or operate a food business without obtaining a license under the Food
Safety Standards Act, 2006.
The Food Safety Standards (Registration and Licensing of Food Businesses) Regulations
2011 determine whether an FBO requires a state/central license or registration. The
thresholds for registering and licensing Food Business Operators (FBOs) were established
in 2011 to achieve universal coverage for food safety regulation. While turnover
thresholds for other classifications, such as MSMEs and GST, have been updated over
time, thresholds for FSSAI registrations and licences have remained unchanged. With
the current thresholds, even small-scale food business operators fall under the licensing
regime.
78 Sections 6.18 and 6.19, pg. 134. Ministry of Finance. 2020. Economic Survey 2019-20, Volume 1. Government of India. https://www.
indiabudget.gov.in/budget2020-21/economicsurvey/doc/vol1chapter/echap06_vol1.pd
79 Organisation for Economic Co-operation and Development. 2020. One-Stop Shops for Citizens and Business (OECD Best Practice Prin-
ciples for Regulatory Policy). https://www.oecd.org/en/publications/one-stop-shops-for-citizens-and-business_b0b0924e-en.html

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 42
FSSAI issues time-bound licences/registrations, which may be mandatorily renewed at
least 30 days before expiry. Failure to renew a license can attract a penalty of up to ₹10
lakh. Given that FBOs already undergo multiple post-establishment checks, the renewal
process duplicates effort and raises costs.
Licences/registrations issued by FSSAI are valid for a period of 1 to 5 years. Regulation
2.1.7(1) of the Food Safety and Standards (Licensing and Registration of Food Businesses)
Regulations, 2011 states that FBOs can choose the validity when applying.
Regulation 2.1.7(2) requires an FBO to renew its license/registration at least 30 days
before the date of expiry. FBOs renew licences/ registrations by submitting a form and
paying the license/registration fee. Even if FBOs can choose the validity period, they
have to pay the annual rates of renewal fees.
The failure to renew can lead to the expiration of a license/registration. Under section 63
of the Food Safety and Standards Act (FSSA), 2006, an FBO operating without an active
license/registration may have to pay a penalty of up to ₹10 lakhs.
RECOMMENDATION
●Increase the turnover threshold for registration to ₹1.5 crore.
●Threshold limit for State and Central licences to be increased in the following
manner:
State license: Above ₹1.5 crore and up to ₹50 crore
Central license: Above ₹50 crore
●Introduce perpetual validity of FSSAI registration/license, license fees to be
paid annually.
Rationale
Increasing the thresholds for registration and licensing of FBOs would decrease the
compliance burden on small-scale FBOs. Licensed FBOs face extra compliance
requirements at both the application and post approval stages.
Increasing the turnover thresholds and introducing perpetual validity for FSSAI
registrations and licences align with the recommendations of Report 1 15112025 of the
High-Level Committee on Non-Financial Regulatory Reforms. The report has called for
the rationalisation of regulatory thresholds and the reduction of recurring compliance
burdens in FSSAI licensing and registration frameworks.
Implementation Roadmap
(i) Based on the recommendations of the High-Level Committee (HLC) on Non-Financial
Regulatory Reforms constituted by NITI Aayog, the Ministry of Health and Family
Welfare has approved major reforms in the FSSAI regulatory framework with effect
from 1 April 2026. As part of these reforms, the turnover threshold for FSSAI registration
has been increased from ₹12 lakh to ₹1.5 crore, while the threshold for State licensing
has been revised up to ₹50 crore, with Central licensing applicable beyond this limit.
(ii) The reforms provide perpetual validity of FSSAI registrations and licences, aimed at
reducing compliance burden, simplifying procedures, and improving ease of doing
business for food business operators, particularly micro and small enterprises.

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 43
4.1.2 Reform: Extend the Validity Period for Liquor Licenses
Alcoholic liquor for human consumption falls under entry 51 of the State List in the
Seventh Schedule of the Constitution. The sale and service of alcoholic beverages are
regulated at the state level, requiring establishments to obtain a bar license from the Excise
Department of the State government. In at least seven states, including Uttar Pradesh,
Tamil Nadu, Goa, Rajasthan, Jharkhand, West Bengal and Assam, bar licences are valid
for only one year. For instance, Section 15 (1) of the Uttar Pradesh Excise (Grant of Bar
Licences) Rules, 2020 stipulates that an establishment with a license to serve liquor may
get it renewed every year on 31 March.
State Name of Licence ValidityAnnual Fees Range (₹)
Uttar Pradesh
80
FL-6 (Hotel Bar) / FL-7 (Restaurant Bar)1 year 5 lakh – 27.5 lakh
Tamil Nadu
81
FL-2/3 (Bar Licence for hotels/clubs)1 year 5.82 lakh – 12.85 lakh
Goa
82
L-4/L-5 (Bar/Hotel Bar) 1 year 0.4 lakh – 3.75 lakh
Rajasthan
83
Hotel Bar Licence 1 year 1 lakh – 16 lakh
Figure 4.1.2: Retail Bar Licensing Framework Across Select States in India
RECOMMENDATION
●Increase the period of validity of bar licences to five years.
Rationale
Time-limited licences can create unnecessary compliance burdens and discourage long-
term investment. Short renewal periods for bar licences create a recurring compliance
cost for restaurants and bars. In practice, compliance is better ensured through inspections
and enforcement, rather than through mandatory periodic renewals.
84
Eliminating
frequent renewals or allowing auto-renewals to reduce recurring compliance costs is also
recommended by the Department for Promotion of Industry and Internal Trade (BRAP
2022). Extending the validity period of liquor licences follows from the same reform
principle.
85

80 Government of Uttar Pradesh. 2025. Uttar Pradesh Excise Policy 2025–26 https://upload.indiacode.nic.in/showfile?actid=AC_ UP
_88_459_00001_00001_1597737627591&filename=notify_policy_2025-26_eng..pdf&type=rule
81 Tamil Nadu Commissionerate of Prohibition & Excise. (n.d.). P & E Fees Structure [PDF]. https://cpe.tn.gov.in/tamil/pdf/P_and_E_
Fees_structure%20.pdf
82 Government of Goa, Department of Finance. (2020). Principal notification 20–21 [PDF]. https://excise.goa.gov.in/docs/Notifications/
Principal%20notification%2020-21.pdf
83 Government of Rajasthan, Excise Department. (n.d.). New licence fee schedule [PDF]. https://iems.rajasthan.gov.in/homepageassets/
image/NewLicanseFee.pdf
84 Organisation for Economic Co-operation and Development. 2025. Licensing and Permitting: How to Manage Risks While Supporting
Growth. https://www.oecd.org/content/dam/oecd/en/publications/reports/2025/10/licensing-and-permitting_f2b74324/68fc3301-en.pdf
85 Department for Promotion of Industry and Internal Trade. 2022. Business Reforms Action Plan. Ministry of Commerce and Industry,Gov-
ernment of India. https://eodb.dpiit.gov.in/PublicDoc/Download/46010

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 44
BEST PRACTICES | Maharashtra and Andhra Pradesh
●The Maharashtra Excise Department allows bar licences to be issued for up
to five years, with licence fees calibrated based on expected sales over the
period.
86
●Under the Andhra Pradesh Excise Rules, 2025, bar licences are granted
with a validity period of 36 months, reducing the frequency of renewals.
Implementation Roadmap
Excise Department under the State government may amend the relevant section(s) under
the State’s Excise Rules, under the respective State Excise Act to increase the validity of
bar licences to five years.
4.2 Issue Category: Redundancy in Approvals
4.2.1 Reform: Remove the Eating House Licence requirement for food and
beverage service providers
Background
The eating house license is a police-issued requirement intended to ensure public order,
safety, and compliance by food-serving establishments. It is mandatory to obtain a
certificate of registration for an eating house. For instance, Section 131-A of the Bombay
Police Act 1951 states that whoever fails to obtain a license under this Act in respect of a
place any eating house within the prescribed period may, on conviction, be punished with
a fine of up to ₹2,000, and may additionally face closure of the premises until compliance,
with further penalties including imprisonment of up to one month or a fine of up to ₹5,000,
or both, in case of non-compliance with such closure orders.
87,88
Apart from this, Section
394 (e) of The Mumbai Municipal Corporation Act mandates a separate municipal license
for the eating house business, specified in Part IV of Schedule M. To obtain this license
for an eating house in Mumbai, 22 documents are required.
89
Moreover, there exist 20
special conditions, apart from the other 31 general conditions, for the trade of an eating
house, u/s 394 of the MMC Act.
RECOMMENDATION
●Discontinue the requirement for food and beverage service providers to
obtain an eating house license from the police.
86 Excise and Taxation Department. (2023). Revisions under Maharashtra Prohibition Act, 1949 (Notification No. No. BPA 112023 /
2023-2024/01/ VI). Government of Maharashtra. https://stateexcise.maharashtra.gov.in/Site/Upload/Pdf/Rewise_Renewal_Notifica-
tion_2023-2024.pdf
87 Section 131-A. Government of Maharashtra. 1951. The Bombay Police Act. https://www.indiacode.nic.in/bitstream/123456789/6792/1/
bombay_police_act_1951.pdf
88 https://indiankanoon.org/doc/39112056/#:~:text=%5BPenalty%20for%20not%20obtaining%20licence,forthwith%20comply%20
with%20such%20direction%5D
89 Government of Maharashtra. 2015. Aaple Sarkar Portal. https://aaplesarkar.mahaonline.gov.in/en

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 45
Rationale
Simplifying and maintaining a business-friendly regulatory environment is essential to
reducing constraints in doing business.
90
International experience supports this approach.
A study on Chicago’s licensing framework found that simplifying restaurant licensing and
removing unnecessary licences reduced time and costs for businesses as well as improved
compliance.
91
BEST PRACTICE | Maharashtra and Andhra Pradesh
●Delhi, following the removal of police-issued licensing requirements for
seven activities, the Eating House Licence is no longer required for the grant
or renewal of excise licences.
92
Implementation Roadmap
Home Department under the State government may amend the relevant sections of the
State government acts to eliminate separate licences for eating house.
90 Section 6.1, pg. 128. Ministry of Finance. 2020. Economic Survey 2019-20, Volume 1. Government of India. https://www.indiabudget.
gov. in/budget2020-21/economicsurvey/doc/vol1chapter/echap06_vol1.pdf
91 Molfetas, A. 2019. Business Licensing Reforms. World Bank. https://documents1.worldbank.org/curated/en/247941561971098931/pdf/
Business-Licensing-Reforms-Insights-from-Selected-Country-Experiences.pdf
92 Excise and Taxation Department. (2025). Order regarding Eating House Registration and Lodging Certificate requirements (Circular No.
F(2)\/Ex/Policy/Misc-ll/2023-24/397-400). Government of National Capital Territory of Delhi. https://excise.delhi.gov.in/sites/default/
files/Excise/circulars-orders/8228_0.pdf

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 46

CHAPTER 05
Transport

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 49
5. Transport
Tourism in India relies on the smooth movement of vehicles across states. The road
transport sector accounts for about 87% of passenger traffic.
93
India’s tourism ecosystem
also includes a growing segment of tourist transport operators. The Motor Vehicles Act,
1988, governs tourism transport operators. As per Section 2 (43) of the Motor Vehicles
Act, 1988, a ‘tourist vehicle’ is a contract carriage constructed or adapted and equipped
and maintained in accordance with such specifications as may be prescribed for this
purpose.
Under Sections 2 and 66 of the Act, vehicles used, including those used for tourism
services, may operate with valid permits issued by the competent transport authorities.
At the Union level, this is operationalised through the All-India Tourist Permit (AITP)
regime, which authorises tourist vehicles to operate across state boundaries. Since 2021,
over 3.5 lakh AITPs have been issued, with more than 1.3 lakh granted in 2025 alone.
94

For transportation, the Union government sets the legal framework for vehicle registration,
permits, and inter-state movement under the Motor Vehicles Act, 1988 and related rules.
On the other hand, states are responsible for administering permits, enforcing compliance,
levying road-use taxes and regulating registration through their transport departments.
Therefore, in practice, tourism transport operators may comply with multiple regulatory
requirements such as vehicle registration, fitness and insurance certification, payment of
motor vehicle taxes, and procurement of an All India Tourist Permit.
The current road freight and transport systems highlight that fragmented charging
practices increase operational costs and reduce efficiency. Several states impose multiple,
layered charges on vehicles, like permit fees and road user charges. Such charges can
weaken the objective of nationally or regionally valid permit regimes.
95
When charges are
imposed by multiple authorities without coordination, they undermine the objective of
nationally or regionally valid permit regimes. The following section examines two such
issues affecting road-based transport services and proposes reforms to simplify charges
and permit requirements.
93 Ministry of Road Transport and Highways. 2025. Road Transportation (Introduction). Government of India. https://morth.nic.in/en/
road-transport
94 Ministry of Road Transport and Highways. 2025. Vahan Parivahan Portal. Government of India. https://vahan.parivahan.gov.in/aitp/
faces/index.xhtml
95 Asian Development Bank. (2022). Road Funds and Road User Charges in the Carec Region. https://www.adb.org/sites/default/files/
publication/850396/road-funds-road-user-charges-carec.pdf

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 50
Figure 5: Regulatory Framework for Transport Operators in India
5.1 Issue Category: Recurring Compliance and Renewal Burden
5.1.1 Reform: Extend the validity of All India Tourist Permits (AITPs) and remove
state-level entry taxes and fees on tourist vehicles
Background
Section 88 of the Motor Vehicles Act, 1988, governs the validation of transport vehicle
permits for use outside the region or state in which they were originally granted. The
All-India Tourist Vehicles (Permit) Rules, 2023, framed under sub-section (9) of Section
88 of the Act, state that an AITP may be valid for a period of ninety days or its multiples
thereof not exceeding five years at a time.
Some states continue to impose additional entry taxes on vehicles, even when they hold
a valid All India Tourist Permit (AITP). For instance, the Kerala Motor Vehicles Taxation
Act, 1976, contains specific provisions under Section 3 that apply to vehicles entering
Kerala from other states with permits under Sections 88(8) and 88(9) of the Motor
Vehicles Act, 1988. Vehicles holding an AITP and registered outside Kerala are required
to pay tax in Kerala from the date of entry until the end of that quarter, at the rate specified
under the Kerala Motor Vehicles Taxation Act, 1976.
96
The All India Tourist Vehicles (Permit) Amendment Rules, 2026 introduced a new Rule
4A, which requires that a vehicle holding an AITP may either start or conclude its journey
in the home state.
97
The vehicle cannot remain outside the home state for more than sixty
days at a stretch. In practice, the 60-day limit requires vehicles operating outside their
home state to return periodically, even when the permit remains valid. Each return and
subsequent re-entry into other states may trigger fresh State-level entry taxes/fees where
such levies continue to apply. As a result, transport operators face recurring administrative
steps and repeated charges within a short operating cycle.
96 Kerala Motor Vehicles Taxation Act, § 3 (1976). https://mvd.kerala.gov.in/sites/default/files/Downloads/Taxation%20act%20updat-
ed%20upto%202023.pdf
97 Ministry of Road Transport & Highways, Government of India. 2026, February 13. All India Tourist Vehicles (Permit) Amendment Rules,
2026 (G.S.R. 131(E)). https://morth.nic.in/sites/default/files/circulars_document/GSR%20131%20E%20dated%2013.02.2026%20-%20
AITP%20Amendment%20Rules%2C%202026_0.pdf

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 51
RECOMMENDATION
●Extend the minimum validity of the All India Tourist Permit from 90 days to
1 year.
●Remove the state-level entry taxes/ fees on motor vehicles already holding
the All India Tourist Permit.
Rationale
Repeated authorisation and renewal requirements in road transport increase operational costs
and administrative workload for operators. Permits and renewal procedures require businesses
to repeatedly spend time and resources on compliance, adding to their operating costs.
98
The All-India Tourist Vehicles (Permit) Rules, 2023 were made with the objective of
seamless and hassle-free movements of tourist vehicles across the country on the strength
of a permit issued after making the payment of the fee. Section 5 of AITP Rules 2023
contains a formula-based distribution of permit fees among States and Union Territories.
99

However, States continue to rely on their own motor vehicle taxation laws, leading to
parallel fee and tax regimes. The Ministry of Road Transport and Highways (MoRTH)
clarified that permit fees collected under the AITP Rules are shared with States and UTs
and advised them not to levy any additional taxes or fees.
100
BEST PRACTICE | United States
Within the U.S. interstate passenger transport system, carriers transporting
passengers for compensation in interstate commerce are required to obtain
federal operating authority from the Federal Motor Carrier Safety Administration
(FMCSA), rather than seeking separate approvals from each state they operate
in.
101
Federal law also limits the ability of states to impose additional entry or
operating-authority requirements on interstate passenger carriers, reducing
fragmentation in cross-state operations.

102
A second feature is the Unified Carrier Registration (UCR) system. Under UCR,
covered interstate operators register annually with their base state and pay a
single annual fee
103
. The UCR framework facilitates the sharing of registration
information and revenue across participating states.
104
This provides a strong example of how a nationally valid transport regime can be
combined with a coordinated revenue-sharing mechanism for states, instead of
relying on multiple state-level registrations or fragmented fee structures.
98 Organisation for Economic Co-operation and Development. 2007. Cutting red tape: Comparing administrative burdens across countries.
OECD Publishing. https://www.oecd.org/content/dam/oecd/en/publications/reports/2007/09/comparing-administrative-burdens-across-
countries_g1gh8270/9789264037502-en.pdf
99 All India Tourist Vehicles (Permit) Rules, CG-DL-E-20042023-245256 § 5 (2023). https://morth.nic.in/sites/default/files/notifications_
document/All%20India%20Tourist%20Vehicles%20%28Permit%29%20Rules,%202023.pdf
100 Ministry of Road Transport and Highways. 2023. Levy of fee/passenger tax/border tax from tourist vehicles plying under All lndia
Tourist Vehicles (Permit) Rules (Circular No. RT-1 1 036/69/2023-IVVL). Ministry of Finance, Government of India. https://morth.nic.
in/sites/default/files/circulars_document/MVL_CIR_RT11036692023%20MVL.pdf
101 FMCSA, Legal Notice for Motorcoach Operations. 2014. https://www.fmcsa.dot.gov/safety/passenger-safety/legal-notice-mo-
torcoach-operations
102 49 U.S. Code § 14501: Federal authority over intrastate transportation. https://www.law.cornell.edu/uscode/text/49/14501
103 UCR. 2025. Fee Brackets. September 21, 2025. https://plan.ucr.gov/fee-brackets
104 UCR. 2025. Participating States. September 12, 2025. https://plan.ucr.gov/participating-states/

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 52
Implementation Roadmap
(i) Ministry of Road Transport and Highways (MoRTH) may amend Section 4(4) of
AITP Rules 2023 to increase the minimum validity period.
(ii) Motor Vehicles Department under the State governments may amend state-level
Motor Vehicles Taxation Acts to exempt vehicles registered in other states that hold
a valid All India Tourist Permit (AITP) from the requirement to pay entry fees or
additional state entry taxes.
5.2 Issue Category: Restrictive Standards
5.2.1 Reform: Revise the re-registration requirement for vehicles relocated to
another state for more than twelve months
Issue
Section 47 of the Motor Vehicles Act, 1988 mandates re-registration of a vehicle that has
been kept in a different state for more than 12 months. When a motor vehicle registered
in one State has been kept in another State for a period exceeding twelve months, the
owner of the vehicle has to apply to the registering authority, within whose jurisdiction
the vehicle then is, for the assignment of a new registration mark. Section 47 also requires
obtaining a No Objection Certificate (NOC) from the state of origin as part of the re-
registration process.
RECOMMENDATION
●Revise Section 47 of the Motor Vehicles Act 1988, to require reregistration in
case of a change in the owner’s residence.
Rationale
Re-registration of a motor vehicle under Section 47 requires submission of 18 separate
documents, merely because the vehicle stayed in another state for over 12 months.
105

Apart from this, the owner is required to pay both the central fee under Rule 81 of the
Central Motor Vehicle Rules, 1989, and the motor vehicle tax levied by the new State.
Requiring periodic vehicle re-registration is an administratively inefficient practice, as
accurate vehicle records can be maintained through simple updates. Modern vehicle
registration systems follow the ‘continuous registration’ principle, in which vehicles
remain on the register, and changes are recorded through updates rather than frequent
re-registration.
106
105 Ministry of Road Transport and Highways. (2025). Reassignment Of Registration Mark. Government of India. https://parivahan.gov.
in/en/ content/reassignment
106 Roger, G., & Ponce de Leon Valdes, M. (2025). Motor Vehicle Information Management Systems. World Bank. https://documents1.
worldbank.org/curated/en/099734011042534543/pdf/IDU-4a2326d8-cbda-41d6-a401-77cb35852c07.pdf

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 53
Motor Vehicle Information Management Systems (MVIMS) are national, centralised
systems that maintain up-to-date vehicle records and share them across authorities.
The MVIMS shows that vehicle records can be kept up to date through simple updates,
without frequent re-registration.
India already has the necessary digital infrastructure to support such a model. VAHAN,
an integrated e-governance platform by the Ministry of Road Transport and Highways
(MoRTH), functions as India’s MVIMS. It is a national centralised digital database
that holds a single, continuous record for every registered vehicle in the country.
Regional Transport Offices (RTOs) use VAHAN to approve online applications, verify
documents, and update fields such as address, ownership, tax, or permits, with every
change becoming visible across India.
Currently, Bharat (BH series) registration vehicles do not require re-registration when
they stay in another state for more than 12 months. A simple address update is carried
out in VAHAN, and the registration number remains unchanged. However, for non-BH
registration vehicles, if the vehicle is kept in another State for more than 12 months,
the law requires re-registration under Section 47 of the Motor Vehicles Act, 1988. In
cases of re-registration, the originating State RTO verifies the vehicle record, while the
new State RTO assigns a new registration number, and the old number is closed while
retaining the same vehicle identity. At present, VAHAN does not automatically monitor
or track the 12-month duration of stay in another State. Compliance is checked largely
through manual enforcement by State transport authorities.
BEST PRACTICES | Malaysia and Spain
 In Malaysia, Section 58A, Road Transport Act, 1987 requires registered
vehicle owners to notify the transport authority of any change in address
within two months, following which the national motor vehicle register is
updated.
107
The provision is limited to maintaining accurate records and does
not mandate re-registration or any change in the vehicle’s registration mark.
 Spain operates a single, nationwide vehicle registration system under
the Reglamento General de Vehículos, with registration remaining valid
irrespective of provincial movement.
108
Under this system, Article 27(1)
establishes that the ordinary registration of a motor vehicle is unique and
national, which remains unchanged throughout the life of the vehicle. It allows
departure from this principle only in limited exceptional circumstances, such
as vehicles entering from abroad or specific legacy cases.
107 Section 58A. Government of Malaysia. 1987. Road Transport Act, 1987. https://www.mot.gov.my/en/Documents/Act%20333%20-%20
Road%20Transport%20Act%201987.pdf
108 Government of Spain. 1999. General Vehicle Regulations (Royal Decree No. 2822/1998). https://www.boe.es/buscar/act.
php?id=BOE-A-1999-1826

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 54
Implementation Roadmap
Ministry of Road Transport and Highways (MoRTH) may revise Section 47 of the Motor
Vehicles Act 1988, to require re-registration in case of a change in vehicle owner’s
residence.

CHAPTER 06
Tour Operators and
Travel Agencies

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 57
6. Tour Operators and Travel Agencies
Tour operators and travel agencies are defined under 3(I) and 3(II) of the Revised
Guidelines for Recognition of Tourism Service by the Ministry of Tourism (2020).
109
A
tour operator designs, packages, and delivers end-to-end travel experiences within the
country, including arrangements for transport, accommodation, sightseeing, entertainment,
and other tourism-related services, either directly or through online platforms. A travel
agent facilitates travel by arranging tickets for air, rail, sea, and other modes of transport,
along with services such as passport and visa assistance for tourists visiting India. A travel
agent may also arrange accommodation, tours, entertainment, and other tourism-related
services as covered under the tour operator category.
Tour operators and travel agents play a central role in connecting tourists with
destinations, transport, and accommodation. Their functions include itinerary planning,
ticketing, accommodation booking, and transport coordination. As these services directly
affect consumer safety, service quality, and destination reputation, governments often
regulate market entry and operations, forming the basis for registration and recognition
frameworks.
Establishing and operating a tour operator business typically requires obtaining a licence
upon meeting the qualifications prescribed by the relevant authorities. State governments
primarily regulate tour operators and travel agencies through registration schemes, rules,
or guidelines under their tourism policy frameworks. These instruments set out eligibility
criteria, documentation, and operational requirements for recognition. However, the
nature and stringency of these requirements vary significantly across states.
In some states, registration is mandatory, requiring operators to obtain approval prior
to commencing operations. For instance, states such as Kerala, Tamil Nadu, Himachal
Pradesh, and Karnataka have compulsory registration requirements. In contrast, states such
as Rajasthan, Meghalaya, Maharashtra, and Uttar Pradesh provide voluntary recognition
frameworks under their tourism policies. In such cases, registration is typically linked
to eligibility for availing benefits and incentives. The key distinction is that mandatory
regimes regulate market entry, whereas voluntary regimes primarily serve as a quality-
signalling mechanism without restricting entry.
The state tourism departments set conditions to define the criteria for businesses to apply
for tour operators/ travel agency registration. This section focuses on three such criteria: (a)
minimum capital requirements, (b) minimum qualifications, and (c) minimum experience.
The conditions can act as entry barriers and may significantly limit the participation of
small, new, and local operators.
109 Ministry of Tourism. 2020. Revised Guidelines for Recognition of Tourism Service (Office Memorandum No. No. TT-701/2/2018-TT).
Government of India. https://tourism.gov.in/sites/default/files/2020-12/Tour%20Opertaors%20Revised%20Guidelines.pdf

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 58
6.1 Issue Category: Restrictive Standards
6.1.1 Reform: Remove minimum capital, educational and experience requirements
to register as a tour operator or travel agency
Background
Registration frameworks for tour operators and travel agencies in several states impose
minimum capital, educational, and prior experience requirements as eligibility conditions.
(i) Minimum capital requirement: Across India, several states impose a minimum
paid-up capital requirement for tour operator and travel agent registration, ranging
from ₹50,000 to ₹4 lakh. At least three key tourism states – Rajasthan, Meghalaya,
and Tamil Nadu – require operators to maintain a minimum paid-up capital to obtain
registration. In these states, tour operators may provide proof of capital through
a bank solvency certificate and the latest audited balance sheet or a Chartered
Accountant’s certificate. For example, Clause 2 of the Tamil Nadu Tour Operators/
Travel Agents and Tourist Transport Operators (Registration) Scheme, 2023,
requires all tour operators and travel agents in Tamil Nadu to register by meeting six
conditions. One of the key requirements of these conditions is a minimum paid-up
capital of ₹1 lakh to be eligible for registration.
(ii) Minimum educational requirement: Across India, these requirements typically
include completing secondary education or earning a degree in a tourism-related
field. For instance, in Kerala, under Rule 3 of the Kerala Registration of Tourist Trade
Act, 1991, a travel agent is required to possess either a degree from a recognised
university or a degree or diploma from a recognised institution related to tourism
and travel studies. Similarly, in Tamil Nadu, the Tamil Nadu Tour Operators / Travel
Agents and Tourist Transport Operator (Registration) Scheme, 2023, introduced
by the Department of Tourism under the Tamil Nadu Tourism Policy 2023, seeks
to standardise service quality. Clause 2 of the Scheme prescribes a minimum
educational qualification of 10+2 or equivalent. It further requires at least one staff
member to possess a degree from a recognised university.
(iii) Minimum experience requirement: Prior industry experience is required in some
states for registration as a tour operator or travel agency to ensure operational
competence and professional service delivery. In Kerala, as per Rule 3 of the Kerala
Registration of Tourist Trade Act, 1991, there are minimum experience requirements
to operate as a travel agent. These requirements include previous work experience
as a key qualification for registration as a Travel Agent. Similarly, in Rajasthan,
the Terms and Conditions for Recognition and Renewal of Travel Agencies,
Excursion Agencies, and Safari Operators require agencies to have been engaged
in the excursion business for at least one year before applying for recognition, with
management staff possessing a minimum of four years’ experience in excursion
work within a registered agency.

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 59
RECOMMENDATIONS
●Remove the minimum capital requirement to register as a Tour Operator or
Travel Agency.
●Remove the requirement for a tourism/travel-related diploma or degree as a
condition for registration.
●Remove the minimum work experience requirement, while introducing
accessible skilling programmes to ensure quality standards are maintained.
Rationale
(i) Minimum capital requirements act as significant barriers to market entry,
particularly for small and first-time entrepreneurs. Evidence shows that in several
developing economies, minimum capital requirements remain a major obstacle
to starting a business.
110
In these countries, entrepreneurs are required to commit
capital equal to at least three times the average annual income simply to register
a firm. Therefore, removing paid-up capital thresholds can expand participation,
improve competition, and support inclusive tourism growth.
(ii) Minimum educational qualification requirements can act as barriers to entry in
service occupations where skills are primarily acquired through experience rather
than formal education. Organisation for Economic Co-operation and Development
(OECD) notes that market entry, especially in professional services, is often limited
by tight qualification requirements.
111
For tour operators, effective performance
largely depends on local destination knowledge, customer service, and operational
experience. Thus, removing strict degree requirements can help local people to work
as operators and staff.
(iii) Removing the prior-experience requirement allows a broader pool of people to
enter the tourism industry and work as tour operators or travel agents. Occupational
entry regulations (OER) such as minimum requirements often reduce both business
dynamism and employment, and lead to higher prices for consumers. By limiting
who can legally enter an occupation, these regulations restrict the supply of service
providers and reduce competitive pressure. This can raise costs for consumers and
limit job creation.
112
BEST PRACTICE | Himachal Pradesh
Under Rule 19 of the Himachal Pradesh Tourism Development and Registration
of Tourism Trade Rules, 2012, travel agent eligibility focuses on a minimum of
10+2 education, the ability to communicate in Hindi or English, knowledge of
local culture and customs, and familiarity with the state’s tourist destinations –
without any minimum paid-up capital requirement or prior experience condition.
This approach targets practical competence rather than formal credentials.
110 Djankov, S., La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. 2002. The Regulation of Entry. The Quarterly Journal of Economics,
117(1), 1–37. https://doi.org/10.1162/003355302753399436
111 Organisation for Economic Co-operation and Development. 2024. Competition and regulation in professions and occupations. https://
www.oecd.org/en/publications/competition-and-regulation-in-professions-and-occupations_218869f5-en.html
112 Organisation for Economic Co-operation and Development. 2020. Occupational licensing – how much and what effects? https://oecde-
coscope.blog/2020/03/31/occupational-licensing-how-much-and-what-effects/

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 60
BEST PRACTICES | Unites States and Malaysia
●In the United States, regulation of tour operators (referred to as “sellers of
travel”) is primarily administered at the state level. Registration requirements
exist in certain states (e.g., California under the Business & Professions
Code § 17550.20(a))

113
, but there are no prescribed minimum educational
qualifications or prior experience requirements for entry into the sector.
This approach focuses on registration and consumer protection mechanisms
without imposing restrictive eligibility criteria, thereby enabling broader
participation while maintaining oversight.
●In Malaysia, the Tourism Industry Act, 1992 of Malaysia regulates licensing
eligibility based on business suitability requirements such as office location,
facilities, and staffing, without imposing minimum educational qualifications
on operators.
114
Implementation Roadmap
(i) Tourism Department under the State governments may amend the registration rules
for Tour Operators/Travel Agents to remove the minimum capital requirement to
register as a Tour Operator/Travel Agency.
(ii) Tourism Department under the State governments may amend the registration
rules for Tour Operators/Travel Agents to remove the minimum diploma/degree in
tourism/travel related disciplines, to register as a Tour Operator/Travel Agency.
(iii) Tourism Department under the State governments may amend the registration rules
for Tour Operators/Travel Agents to remove minimum experience requirement
while introducing accessible skilling programmes to ensure quality standards are
maintained.
113 California Business and Professions Code, § 17550. https://oag.ca.gov/sites/all/files/agweb/pdfs/travel/sot-statute-17550-59.pdf
114 Government of Malaysia. 1992. Tourism Industry Act. https://gotraz.com.my/wp-content/uploads/2021/04/TOURISM-INDUS-
TRY-ACT-1992.pdf

CHAPTER 07
Environment, Coastal, and
Forest Related
Regulations for Tourism
Related Projects

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 63
7. Environment, Coastal, and Forest Related Regulations for Tourism
Related Projects
Tourism projects, particularly those located in ecologically sensitive areas such as
coastal regions, forest landscapes, and environmentally regulated zones, are subject to
a range of approvals and compliance requirements. These regulations serve important
public objectives, including environmental protection, conservation of natural resources,
and sustainable development. However, the current framework is often characterised
by multiple layers of approvals, overlapping mandates across authorities, and limited
clarity in processes, which can lead to delays and increased compliance burden for project
developers. This chapter outlines recommendations to streamline environmental, coastal,
and forest-related regulatory frameworks governing tourism projects, while ensuring that
core environmental safeguards are maintained.
7.1 Environmental Clearance
7.1.1 Reform: Constitute a dedicated Expert Appraisal Committee (EAC) at the
State level for expedited appraisal and grant of Environmental Clearance
(EC) to hotel projects
Background
Environmental Clearance (EC) is a mandatory pre-construction approval for building,
construction, and area development projects, as applicable under the Environment
(Protection) Act, 1986.
115
The EIA Notification, 2006, under the Act, broadly categorises
projects into two categories: Category A and Category B.
116
There is no single size limit
that applies to all projects; instead, the notification prescribes sector-specific size or
capacity thresholds for each type of project. If a project exceeds the higher threshold set
for its sector, it is treated as Category A, appraised by the Expert Appraisal Committee
(EAC). If it falls within the lower range, it is classified as Category B and is appraised by
the State Expert Appraisal Committee. For example, a thermal power plant of 500 MW
or more is treated as Category A, while a smaller plant falls under Category B. Within
Category B, projects are further divided into B1 which require a full Environment Impact
Assessment (EIA) study and public hearing and B2, which do not require a full EIA.
For instance, building and construction projects with a built-up area between 20,000 and
1,50,000 sq. m. fall under Category B2.
Category A projects are appraised by the Expert Appraisal Committee (EAC) and granted
clearance by the Ministry of Environment, Forest and Climate Change (MoEFCC),
Government of India. They do not undergo a screening stage and mandatorily require
preparation EIA report. Category B projects are appraised by the State Expert Appraisal
Committee (SEAC) and approved by the State Environment Impact Assessment Authority
(SEIAA). They first undergo screening stage by the SEAC to determine whether an EIA
study is required.
115 Ministry of Environment, Forest and Climate Change. 2006. The Environment Impact Assessment Notification, 2006 (S.O. 1533(E), 14
September 2006). https://environmentclearance.nic.in/writereaddata/EIA_notifications/2006_09_14_EIA.pdf
116 Environmental Protection Act, 1986. 1986 https://www.indiacode.nic.in/bitstream/123456789/4316/1/ep_act_1986.pdEnvironmental

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 64
Appraisal stage involves a detailed scrutiny of the proposal by the EAC or the SEAC. In
cases where an EIA study and public consultation are required, the Committee examines
the final EIA report, the outcome of public consultation, and all related documents. After
the EIA study and public consultation, the final report is submitted for appraisal, which
may be completed within 60 days. The Ministry is required to communicate its decision
within 45 days of receiving the EAC’s recommendation. For projects that do not require
public consultation or EIA report, appraisal is carried out on the basis of the prescribed
Form-1/ Form- 1A. The appraisal may be completed by the EAC or the SEAC within 60
days of receipt of the final EIA report and any other required documents. In cases where
public consultation is not required, the 60-day period is counted from receipt of Form 1
and Form 1A, as applicable.
The regulatory authority may communicate its decision within 45 days of receiving the
recommendations of the EAC or the SEAC. The overall process for grant or rejection of
Environmental Clearance is to be completed within 105 days of receipt of the complete
application with requisite documents.
117
For category B projects, the State EAC reviews
the documents and then advises the SEIAA on whether to grant Environmental Clearance
(EC). The PARIVESH portal is the official online system for submitting and tracking
EC applications, where project proponents can edit and monitor the status of proposals
submitted for environmental clearance.
In practice, the EC approval process is marked by delays. Appraisal depends on SEAC
meeting schedules, which are not always predictable. Even after SEAC/SEIAA meetings
are held, the minutes and clearance decisions take far longer to be uploaded on the official
portal.
118
As a result, accommodation projects face delays in getting the environmental
clearance to start operations.
RECOMMENDATION
●Constitute a dedicated EAC, on request of states, to review applications for
the grant of Environmental Clearance (EC) for tourism related projects.
Rationale
Accommodation service providers often face delays in obtaining EC because SEAC’s
review a wide range of projects across sectors. When the same committee examines
mining, infrastructure, industrial, and building projects together, appraisal timelines
increase. An audit report by Comptroller and Auditor General of India (CAG) on the grant
of Environmental Clearances found that 89% of cases faced delays where clearance was
not granted within the mandated 105-day period, with delays occurring at different stages
of the EIA process, including appraisal.
119
One way to address these delays is to create specialised appraisal bodies focused on
particular sectors. For example, the Ministry of Environment, Forest and Climate Change
(MoEFCC) issued a notification that reconstituted the SEIAA and four separate SEACs in
117 Paragraph 8, Ministry of Environment, Forest and Climate Change. 2006. The Environment Impact Assessment Notification, 2006 (S.O.
1533(E), 14 September 2006). https://environmentclearance.nic.in/writereaddata/EIA_notifications/2006_09_14_EIA.pdf
118 Mr. Sayyed Mohammed Sabir Usman v. Union of India, Appeal No. 33/2024 (National Green Tribunal Western Zone Bench, Pune, Aug.
13, 2025). https://www.casemine.com/judgement/in/68bad39953f6b4579e703e1e
119 CAG. 2016. Chapter 2: Process of grant of environment clearance (Report No. 39 of 2016). GoI. https://cag.gov.in/uploads/download_
audit_report/2016/Chapter_2_Process_of_grant_of_Environment_Clearance_Union_Government_Report_39_of_2016.pdf

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 65
Rajasthan to assist with environmental clearances across the state.
120
Each SEAC now has
defined territorial jurisdiction to review and appraise project proposals, which has helped
streamline the clearance process for mining projects facing Supreme Court-mandated
deadlines for EC renewal.
BEST PRACTICE | United States
In the United States, the FAST-41 is a legislatively established process for
environmental review for infrastructural projects. It assigns a lead authority, sets
time-bound review schedules, and allows public tracking of approvals through
an online dashboard. It provides clarity on requirements up front and reduces
uncertainty over time through time-bound processing.
Implementation Roadmap
(i) Ministry of Environment, Forest and Climate Change (MoEFCC) may write to and
work with the States to setup a dedicated State Expert Appraisal Committee for
tourism related projects, to enable expedited appraisal of Environmental Clearance
applications.
(ii) Department of Environment, Forest and Climate Change under State government
may request the Ministry of Environment, Forest and Climate Change to setup
dedicated State Expert Appraisal Committee for tourism related projects, to enable
expedited appraisal of Environmental Clearance applications.
7.2 Coastal Regulation Zone (CRZ) Clearance
7.2.1 Reform: Issue guidelines for granular mapping of coastal areas to simplify
Coastal Regulation Zone (CRZ) clearance
Coastal Regulation Zone (CRZ) clearance is a mandatory preconstruction approval under
the Coastal Regulation Zone (CRZ) Notification, 2019, as issued under Section 3 of the
Environment (Protection) Act, 1986.
121,122
Coastal areas are classified into four categories –
CRZ-I (ecologically sensitive areas), CRZ-II (developed urban areas), CRZ-III (relatively
undisturbed rural areas), and CRZ-IV (water areas up to 12 nautical miles from the shore
on the seaward side). In CRZ-I and CRZ-IV zones, construction/ building activities are
not allowed. In CRZ-II and CRZ-III zones, accommodation service providers require
pre-construction approval from the State Environment Impact Assessment Authority
(SEIAA), based on the recommendation of the State Coastal Zone Management Authority
(SCZMA).
For a construction project in CRZ-II and CRZ-III zones, accommodation service
providers may submit applications for CRZ clearance to the relevant State/UT Coastal
Zone Management Authority (CZMA) through the PARIVESH portal.
120 Government of Rajasthan. 2024. Reconstitution of State Environment Impact Assessment Authority and State Level Expert Appraisal
Committees (Notification No. SEIAA/SEAC/2024/10122024). Department of Environment, Government of Rajasthan. https://environ-
ment. rajasthan.gov.in/content/dam/environment/Env/Notification/10122024_Notificaton.pdf
121 Ministry of Environment, Forest and Climate Change. 2019. Coastal Regulation Zone Notification, 2019 (G.S.R. 37(E)) [PDF]. State
Coastal Zone Management Authority, Odisha. https://www.sczmaodisha.org/pdf/CRZ%20Notification%202019%20English.pdf
122 Environment (Protection) Act, 1986, No. 29 of 1986, Government of India. 1986. The Environment (Protection) Act, 1986. https://www.
indiacode.nic.in/bitstream/123456789/4316/1/ep_act_1986.pdf

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 66
Where a project requires both Environmental Clearance (EC) and CRZ clearance,
the CZMA examines the proposal and forwards its recommendations for a composite
EC+CRZ clearance. CZMA is required to make its recommendation within 60 days of
receipt of a complete application.
However, in practice, CRZ clearance often takes longer than these prescribed timelines.
Such delays arise from issues related to the High Tide Line (HTL) and Low Tide Line
(LTL) demarcation, the interpretation of the Coastal Zone Management Plan (CZMP),
and repeated site clarifications. In several coastal states, HTL and LTL reference maps are
not properly verified for accuracy even after Coastal Zone Management Plans (CZMPs)
are approved.
123
Gaps persist in the granular mapping and digitisation of coastal data at
the state level. Such issues affect how coastal zones are identified and can slow down the
processing of CRZ clearance applications.
RECOMMENDATION
●Ministry of Environment, Forest and Climate Change may issue guidelines
for states and to support states in developing detailed and accurate maps of
coastal zones (with verified HTL/LTL), for use in the CRZ clearance process
to avoid repeated clarifications and reduce delays.
Rationale
Delays in CRZ clearance often occur because coastal boundaries and zoning details are
not available in a clear and verified digital format. Publishing clearly updated maps with
verified HTL/LTL demarcation would reduce the need for repeat site clarifications.
BEST PRACTICE | United States
In the United States, under the Coastal Zone Management Act, coastal states
maintain publicly accessible GIS datasets covering shoreline boundaries, erosion
hazard areas, wetlands, flood zones, and setback lines. NOAA’s Digital Coast
platform provides authoritative, standardised coastal geospatial data used directly
in permitting decisions.
Implementation Roadmap
Coastal Zone Management Authority, Ministry of Environment, Forest and Climate
Change (MoEFCC) may issue guidelines to states and support them in developing detailed
and accurate maps of coastal zones (with verified High Tide Line/ Low Tide Line) for use
in the Coastal Regulation Zone (CRZ) clearance process, to avoid repeated clarifications
and reduce delays.
123 Comptroller and Auditor General of India. 2022. Compliance audit of management of coastal regulation zone in the Ministry of En-
vironment,Forest and Climate Change (Chapter 2). https://cag.gov.in/uploads/download_audit_report/2022/Chapter%202-062f1f-
1d0a6f573.14543971.pdf

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 67
7.3 Forest Related Regulations
7.3.1 Reform: Mandate high-resolution mapping of forest lands and integrate
with revenue records for forest land diversion approval
Background
Forest land diversion approval (Forest Clearance) is a mandatory pre-construction
approval under Section 2 of Van (Sanrakshan Evam Samvardhan) Adhiniyam, 1980.
124

It mandates prior approval of the Government of India before forest land can be used for
non-forest purposes. The procedure for submission, scrutiny and grant of such approvals
is laid down under Rules 9, 10 and 11 of the Van (Sanrakshan Evam Samvardhan) Rules,
2023.
125
Applications are submitted and processed online through the Government
of India’s PARIVESH portal, which handles environmental, forest, wildlife and CRZ
clearances. For hotel projects, Forest Clearance is mandatory if any part of the proposed
land is recorded as forest land or falls within areas requiring approval under the Van
(Sanrakshan Evam Samvardhan) Adhiniyam, 1980. The mandate applies even if the land
appears non-forest in revenue records but is treated as forest in government notifications
or court directions.
In practice, project developers face uncertainty about whether a land parcel qualifies as
forest land. Revenue records often do not align with forest department records, and no
official overlay maps exist to show forest boundaries alongside revenue parcels. A recent
CAG audit reported that 1.98 lakh hectares of forest land are yet to be mutated in favour
of the Forest Department.
126
Such mismatches delay project approvals and hinder timely
pre-construction planning.
RECOMMENDATION
●Issue guidelines to states and support states in developing and digitising high-
resolution forest land maps, to integrate them with revenue forest records for
early identification of Forest Clearance requirements.
Rationale
A clear overlay of forest and revenue records would allow developers to confirm forest
status at the outset, before land acquisition and design approval. This would reduce
mismatches between departments and reduce delays in the pre-construction stage.
124 Van (Sanrakshan Evam Samvardhan) Adhiniyam, 1980. 1980. https://www.indiacode.nic.in/bitstream/123456789/1760/4/a1980-69.pdf
125 Van (Sanrakshan Evam Samvardhan) Rules, 2023. 2023. Government of India. https://thc.nic.in/Central%20Governmental%20Rules/
Van%20%28Sanrakshan%20Evam%20Samvardhan%29%20Rules%2C%202023.pdf
126 Comptroller and Auditor General of India. 2024. Audit II Report No. 3 of 2024: Compliance Audit on Forest Land Management (English).
https://cag.gov.in/uploads/download_audit_report/2024/AUDIT-II-REPORT-No.3-of-2024-English-066a241b7b9b7c4.37123517.pdan
that clearly demarcated

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 68
BEST PRACTICE | United Kingdom
The United Kingdom government’s MAGIC (Multi- Agency Geographic
Information for the Countryside) Map platform overlays protected areas, ancient
woodland, conservation zones, and other environmental designations. This
reduces departmental disputes by providing an official environmental overlay
map as a single source of truth.
Implementation Roadmap
Ministry of Environment, Forest and Climate Change (MoEFCC) may issue guidelines
to states and support them in developing and digitising high-resolution forest land maps,
to integrate them with revenue forest records, for early identification of Forest Clearance
requirements.

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR CHAPTER 08
Visa Reforms

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 71
8. Visa Reforms
8.1 Role of Visa Facilitation in Tourism Outcomes
As highlighted in Chapter 1, India’s tourism sector continues to underperform relative
to its potential despite strong underlying assets. While supply-side constraints have been
examined in the previous chapters, international tourism outcomes are also shaped by the
ease of entry for foreign visitors.
Visa regimes play a central role in shaping international tourism flows. Research indicates
that restrictive visa requirements can reduce inbound travel by approximately 70%, while
visa liberalisation has a positive effect on tourism service exports, particularly from
distant, high-income source markets.
127

Globally, visa regimes have become more facilitative over time. Between 2008 and 2023,
the share of travellers requiring traditional pre-departure visas declined from ~77% to
~47%, while the use of Electronic Visas (E-Visa) increased sixfold and visa-free travel
expanded.
128
Evidence from OECD and ASEAN economies suggests that visa facilitation
measures can increase tourist arrivals by up to 25%, highlighting the role of visa policy
as a demand-side lever.
129
India has not scaled visa facilitation to the same extent as leading tourism economies. It
ranks below the global average on the UN Tourism Visa Openness Index, with a score
of 38.14 compared to the world average of 40. Asia and the Pacific averages at 46, well
above India, while more open destinations such as Malaysia (80.48), Sri Lanka (67.07),
Thailand (58.66), and Indonesia (53.16) are far ahead, positioning visa reform as a key
lever for competitiveness
130
.
In this context, visa policy functions not only as an administrative requirement but as a
strategic instrument for demand generation, visitor retention, and international tourism
competitiveness.
8.2 Structure and Key Issues in India’s Visa Regime
India’s visa framework comprises four primary entry channels: visa-free access, visa-
on-arrival, E-Visa, and regular visa. Visa-free entry is currently available only to Nepal,
Bhutan, and Maldives under bilateral arrangements. Visa-on-arrival facilities are also
limited to a few nationalities (Japanese and South Korean nationals get VoA for 60
days) and are not widely available as a mainstream entry channel.
131
As a result, most
international travellers are required to obtain prior approval before travel.
The E-Visa framework has emerged as the primary instrument for facilitating inbound
travel, covering nationals of 175 countries and valid for entry through 38 designated
airports, 16 designated seaports and 02 land ports.
132
It includes 09 sub categories including
127 Lawson, R. A., & Roychoudhury, S. 2015. Do travel visa requirements impede tourist travel? Journal of Economics and Finance, 40(4),
817–828. https://doi.org/10.1007/s12197-015-9343-5
128 World Tourism Organisation. 2023. Tourism Visa Openness Report 2023 Default Book Series. https://www.e-unwto.org/
doi/10.18111/9789284425044
129 World Tourism Organisation. 2023. Tourism Visa Openness Report 2023 Default Book Series. https://www.e-unwto.org/
doi/10.18111/9789284425044
130 World Tourism Organisation. 2024. Tourism Visa Openness Report 2023, UNWTO, Madrid, DOI: https://doi.org/10.18111/9789284425044
131 https://indianvisaonline.gov.in/evisa/tvoa.html
132 Press Information Bureau. 2026. Tourism reforms undertaken by the Central Government to strengthen on-ground safety mechanism for
tourists. https://www.pib.gov.in/PressReleseDetailm.aspx?PRID=2226972

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 72
e-Tourist Visa, e-Business Visa, e-Medical Visa, e-Medical Attendent Visa, e-Student Visa,
e-Family Visa, e-Transit Visa, e-Miscellaneous Visa, e-Production Investment Visa
133
. In
parallel, regular visas continue to operate for longer-term and specialised purposes, often
involving more extensive documentation and processing timelines.
Despite this multi-channel framework, several constraints limit the effectiveness of
India’s visa regime.
8.2.1 Limited Access and Restrictive Design
Visa-on-arrival facilities are available only to a limited set of nationalities (Japan, South
Korea, UAE), and visa-free entry is restricted. As a result, most international travellers
are required to obtain prior approval before travel. This reliance on pre-approval processes
increases planning requirements and limits short-notice and discretionary travel.
Further, even within the E-Visa framework, variation across categories in terms of validity,
stay limits, and entry conditions creates complexity for applicants.
Figure 8.2.1(a): Variations in E-Visa Across Categories
134
In contrast, competing destinations have adopted more liberal entry regimes. Indonesia
135
,
Thailand
136
, and Türkiye for example, provide visa on arrival to nationals from 97, 31, and
27 countries, respectively
137
.
This gap in access and flexibility reduces India’s competitiveness, particularly for short-
haul, discretionary travel, spontaneous travel, and short-notice visits, where ease and
predictability of entry are key determinants of destination choice.
133 https://indianvisaonline.gov.in/evisa/tvoa.html
134 https://indianvisaonline.gov.in/evisa/tvoa.html
135 https://www.imigrasi.go.id/wna/daftar-negara-voa-bvk-calling-visa
136 Thailand MFA. 2024. Summary of Weekly Press Briefing. https://mfa.go.th/en/content/weeklypressbriefing180724-2?cate=5d5bc -
b4e15e39c306000683e
137 https://www.evisa.gov.tr/en/info/who-is-eligible-for-e-visa/

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 73
A comparison with Asian peers shows India is relatively less open on entry, offering visa-
free or visa-on-arrival access to just 5 countries (vs. 21–169 for others). India also attracts
fewer foreign tourists than these countries.

Figure 8.2.1(b): Flexible Visa Regimes and Corresponding FTAs
138
8.2.2 Shorter Validity and Limited Repeat Travel
While the introduction of one- to five-year validity options under the E-Visa framework
is a facilitative step, the continued reliance on shorter-duration visas, restricted entries,
and annual stay caps increases reapplication requirements and compliance burden for
travellers. In contrast, competing destinations offer more flexible visa frameworks that
reduce friction for repeat travellers and enable continuity in travel planning. Consequently,
India’s current visa structure provides relatively limited flexibility for repeat travel,
even as leading tourism economies increasingly use long-term, multiple-entry visas to
encourage repeat visitation and deepen tourist engagement.
Country Entries Allowed Validity
USA Multiple Upto 10 years
139
Canada Multiple Upto 10 years
140
UK Multiple 2, 5, or 10 years
141
China Multiple* Upto 10 years
138 UN WTO dashboard; Visa regulations from respective country portals: https://www.imi.gov.my/index.php/en/main-services/visa/vi-
sa-requirement-by-country/; https://www.indonesia.travel/gb/en/travel-ideas/culture/visa-free-for-169-countries-to-travel-to-indone-
sia/; https://thaiconsulatela.thaiembassy.org/en/publicservice/visa-exemption-and-visa-on-arrival-to-thailand; https://www.ica.gov.sg/
enter-transit-depart/entering-singapore; https://vietnam.travel/things-to-do/viet-nam-waives-visas-citizens-12-countries; https://www.
visaforchina.cn/SYD3_EN/tongzhigonggao/265975107544027136.html; https://www.thehindu.com/news/international/sri-lanka-to-
offer-free-visas-to-40-countries-to-boost-tourism-foreign-minister/article69856398.ece
139 International Trade Administration. 2024. December and Annual 2024 Total International Travel Volume. https://www.trade.gov/fea -
ture-article/december-and-annual-2024-total-international-travel-volume; U.S. Department of State. Visitor Visa. https://travel.state.
gov/content/travel/en/us-visas/tourism-visit/visitor.html
140 Statistics Canada. 2024. The Daily-Retail Trade, December 2023. https://www150.statcan.gc.ca/n1/daily-quotidien/240222/dq240222a-
eng.htm ; Government of Canada, Immigration, Refugees and Citzenship Canada. What Is the Difference Between a Single-Entry and
a Multiple-Entry Visa? https://ircc.canada.ca/english/helpcentre/answer.asp?qnum=417&top=16
141 Office for National Statistics. Leisure and Tourism https://www.ons.gov.uk/peoplepopulationandcommunity/leisureandtourism ; UK
Government. Visit the UK as a Standard Visitor: Overview. https://www.gov.uk/standard-visitor

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 74
Country Entries Allowed Validity
ROK Multiple* 5 – 10 years
142
Japan Multiple* < 5 years
143
UAE Multiple 5 years
144
India
Double (30-day e-Tourist)
Multiple (1-year and 5-year e-Tourist)
30 days, 1 year, 5 years
Figure 8.2.2: Visa Validity and Number of Entries Allowed by Country
8.2.3 Friction in application process
The visa application process remains complex and fragmented, with multiple points of
friction across the user journey.
In late November 2025, an American investor posted a widely shared complaint about
India’s E-Visa portal.
145
Subsequent coverage reported that the post drew over 1 million
views and prompted many travellers to share similar issues, including irrelevant content
appearing within the form and foreign credit cards being rejected. The WTTC has argued
that simplifying travel access to India is a high-impact growth lever: in June 2025, its
President and CEO said that “making it easier to visit India is one of the fastest ways to
unlock further international arrivals and spending,”
146
while calling for simplification of
the E-Visa process and highlighting visa frictions in key source markets.
Compared to peers, the process is characterised by higher processing times, more input-
intensive application requirements, and lower overall usability. In addition, the absence
of key user-centric features such as mobile responsiveness, seamless payment options,
and real-time tracking contributes to a less efficient and more cumbersome application
experience. These issues reduce application completion rates and create a perception of
unreliability in the system, particularly for first-time travellers.
Key issues include:
(i) Fragmented systems: Fragmentation across portals and agencies creates repeated
data submission and verification requirements, increasing friction before, during,
and after travel. Data is submitted repeatedly across E-Visa, Arrival, and Form C
systems with no unified traveller profile.
(ii) Excessive E-Visa form fields: The E-Visa form asks for far more information than
is proportionate for a standard tourist E-Visa, including personal, family, and travel-
history details that appear unrelated to low-risk short-stay travel. This increases
applicant burden, slows completion, and makes India’s E-Visa process feel more
intrusive than competing systems.
142 Korea Tourism Organisation. Tourism Statistics. https://kto.visitkorea.or.kr/eng/tourismStatics ; Korea Visa Portal. Visa Navigator.
https://www.visa.go.kr/openPage.do?MENU_ID=10101
143 Japan National Tourism Organisation. Japan Tourism Statistics. https://statistics.jnto.go.jp/en/ ; Ministry of Foreign Affairs of Japan.
Validity of a Visa.https://www.mofa.go.jp/j_info/visit/visa/procedure/validity.html
144 The Official Portal of the UAE Government. Visiting and Exploring the UAE. https://u.ae/en/information-and-services/tourism; The
Official Portal of the UAE Government. Tourist Visa. https://u.ae/en/information-and-services/visa-and-emirates-id/tourist-visa
145 Times of India. 2025. https://timesofindia.indiatimes.com/world/us/us-investor-slams-comically-broken-e-v sa-application-process-in-
india-if-you-can-survive-it-/articleshow/125613765.cms
146 WTTC. 2025. https://wttc.org/news/india-international-visitor-spend-soars-to-record-highs

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 75
(iii) Technical failures: Applicants frequently face website crashes during peak hours,
session timeouts that erase entered data, CAPTCHA loops that block submission,
and random display glitches. The platform is also not suitably optimised for modern
browsers and mobile devices. These failures reduce application completion rates
and create a perception of unreliability in India’s digital governance systems.
(iv) Payment gateway failures: Foreign credit and debit cards are routinely declined on
the portal, with transactions limited to Indian bank gateways such as SBI ePay and
Axis Bank, which often fail for cross-border payments. There is little integration
with globally accepted processors; cases of double charges also lack a clear refund
mechanism. This creates unnecessary drop-offs at the final step of the application
journey.
(v) Poor communication and support: When something goes wrong, applicants have
little clarity on how to fix it. Tracking is limited, support is largely automated,
and live support is absent. Source of friction arises from the limited visibility and
support available to applicants during the visa application process. While the E-Visa
system provides basic status updates like application submitted, under progress
and granted/rejected; applicants have limited ability to track the progress of their
application like expected processing timelines or understand the reasons for delays.
Support mechanisms are largely automated and rely primarily on FAQs, standardised
responses and standardized email responses, with limited access to personalised
assistance like Real-time chat support or dedicated customer service helpline. Further,
the absence of readily accessible real-time customer support makes it difficult for
applicants to resolve technical issues, payment-related issues or application-specific
queries in a timely manner. These limitations increase uncertainty for travellers and
may adversely affect the overall user experience, particularly for first-time visitors.
(vi) Poor user interface: The portal interface lacks visual hierarchy, making it difficult
for users to distinguish between key actions, informational content and navigation
elements. Important information such as application status, required actions and
supporting instructions is not sufficiently prioritised through layout, typography or
visual cues. As a result, it reduces the overall ease of use of the platform. Weak
user experience has also enabled fraudulent lookalike websites to proliferate, further
damaging trust.

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 76
Figure 8.2.3(a): Issues with India’s E-Visa Portal
Figure 8.2.3(b): Friction Points at Each Stage of the Tourist Journey
8.2.4 Fragmented marketing
India’s fragmented marketing and lack of integrated loyalty programmes dilute the potential
impact of visa facilitation on repeat visitation. Without a cohesive digital destination platform
and structured incentives for return visitors, India does not compound the value of each
acquired visitor over time. Repeat visitors are a high-value segment
147
because they are a cost-
effective source of demand, often stay longer
148
, engage more deeply with the destination, and
generate word-of-mouth and loyalty effects that help attract first-time visitors
149
.
147 Tan, W. 2016. Repeat visitation: A study from the perspective of leisure constraint, tourist experience, dest nation images, and experien-
tial familiarity. Journal of Destination Marketing & Management, 6(3), 233–242. https://doi.org/10.1016/j.jdmm.2016.04.003
148 WANG, DONGGEN. 2004. Tourist Behaviour and Repeat Visitation to Hong Kong. Tourism Geographies 6 (1): 99–118. doi:10.1080
/14616680320001722355.
149 Gellerstedt, M., Arvemo, T. 2019. The impact of word of mouth when booking a hotel: could a good friend’s opinion outweigh the online
majority?. Inf Technol Tourism 21, 289–311. https://doi.org/10.1007/s40558-019-00143-4

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 77
8.3 Easing the Challenges in Visa Application
India has initiated important steps toward portal rationalisation and User experience
improvements, aligning the visa platform more closely with global best practices through
external payment gateways, unified applicant profiles, and streamlined data entry. These
reforms strengthen the processing backbone and improve user experience.
Between August 2025 and February 2026, India expanded E-Visa coverage by adding 3
new nationalities, 1 new visa sub-category, 6 additional airports, 10 additional seaports,
and 2 land ports, widening access for inbound travellers.
Parallel on-ground facilitation is also being strengthened through visitor support services
for inbound travellers. The Government has announced initiatives including a multilingual
tourist helpline and a digital e-Arrival Card
150
for foreign travellers, aimed at improving
traveller assistance and facilitating the visitor journey after arrival.
India is also piloting payment facilitation for foreign visitors, a major friction point
closely linked to travel readiness: in February 2026, National Payments Corporation of
India (NPCI) extended/launched the UPI One World prepaid wallet pilot for international
visitors from 40+ countries, enabling them to make UPI merchant payments without an
Indian bank account. These systems need significant improvements to function effectively
on-ground. For instance, the digital e-Arrival card requires OTP verification, which often
fails for foreign tourists due to issues with international phone numbers.
8.4 Suggested Reform: Transition to a Tourist Visa-on-Arrival (VoA) Framework
Given the issues identified above, it is recommended that India gradually transitions
towards a Tourist Visa-on-Arrival (VoA)-led facilitation framework, supported by
simplified visa categories, a targeted country selection approach, and strengthened digital
and payment infrastructure.
This reform marks a shift from a predominantly pre-approval-based system to a facilitation-
led entry regime aligned with global best practices. By reducing procedural barriers at the
point of entry and enabling greater flexibility in travel planning, the proposed framework
is expected to improve the conversion of travel intent into actual visits, support repeat
visitation through easier re-entry, and enhance India’s competitiveness in attracting high-
value international tourists.
8.4.1 Introduction of Tourist Visa-on-Arrival (VoA)
A 90-day, multiple-entry Tourist Visa-on-Arrival (VoA) may be introduced for selected
countries to strengthen inbound tourism demand and enable seamless travel.
Under this framework, eligible travellers would be able to obtain entry permission at
designated airports and seaports through a simplified on-arrival process, eliminating the
need for prior application and approval. This shift is expected to significantly reduce entry
friction, particularly for short-notice and discretionary travel, where procedural barriers
often deter travel decisions.
150 https://indianvisaonline.gov.in/earrival/

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 78
To maximise tourism outcomes, the VoA may allow multiple entries within the validity
period.
Multiple-entry access is critical to enabling repeat travel behaviour, which is a key
driver of tourism revenue in leading destinations. It supports the development of regional
circuits, medical follow-ups and allows travellers to combine India with neighbouring
destinations, and enables longer and more flexible itineraries.
From a policy perspective, enabling repeat entry reduces the need for repeated applications,
lowers administrative burden, and increases the lifetime value of each visitor. It also
aligns India’s visa framework with global practices, where long-duration, multiple-entry
visas are used strategically to deepen tourist engagement and encourage return visits.
The facility may also be extended to medical tourists, enabling timely access to treatment
and strengthening India’s positioning as a global hub for affordable and high-quality
healthcare services.
Targeted Country Selection Framework
The VoA regime may be introduced in a phased and targeted manner, with eligible
countries selected from the existing E-Visa list.
Country selection may be guided by a combination of tourism potential, reciprocity, and
risk considerations. The following criteria is proposed for selection:
(i) Country-Wise distribution of Foreign Tourist Arrivals (FTAs) in India (2023)
(ii) Highest Diaspora Population (Population >10,000)
(iii) Foreign Countries which provide Visa On Arrival/ Visa Free arrival facilities to
Indian Passport holders
(iv) Top 25 Passports in The Henley Passport Index 2025 Global Ranking
In addition, eligibility may be limited to countries with low irregular migration risk and
demonstrated cooperation with India on security and regulatory matters.
A calibrated approach to country selection will ensure that visa liberalisation is aligned
with both tourism growth objectives and national security priorities, while enabling a
phased rollout that can be scaled over time.
8.4.2 On-Arrival Registration and Digital Authorisation
To ensure that facilitation is balanced with security considerations, the VoA system may be
supported by a streamlined on-arrival registration and digital authorisation process.
This would enable:

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 79
(i) real-time capture of traveller information
(ii) automated security screening and risk assessment
(iii) issuance of electronic travel authorisation at the point of entry
Biometric verification may be integrated at entry points to strengthen identity validation
while maintaining processing efficiency.
Such systems are widely used in leading destinations and demonstrate that ease of entry
and border security can be effectively combined through digital integration. For India,
this approach would ensure that the transition to a more facilitative regime does not
compromise regulatory oversight.
Thailand Digital Arrival Card aims to streamline immigration by ensuring faster
processing, less paperwork and enhanced border security.
Citizens of Visa Waiver Program (VWP) countries do not need a visa for US for a stay
of 90 days, but may complete the Electronic System for Travel Authorisation (ESTA)
before travel.
8.4.3 Rationalisation of E-Visa Categories
The current E-Visa framework includes multiple sub-categories with overlapping
purposes, contributing to complexity for applicants and inefficiencies in processing.
It is recommended to rationalise existing categories into a smaller set of broad-purpose
classifications, including:
(i) tourism
(ii) business visits
(iii) short-term medical treatment
(iv) short-term student visas
(v) dependent or attendant visas
This simplification will reduce cognitive and procedural complexity for applicants,
improve clarity in visa selection, and enable more efficient backend processing. It will
also support the transition to a more user-centric visa system aligned with international
best practices.
8.4.4 Strengthening Digital and Payment Infrastructure
The effectiveness of the VoA system will depend on the availability of robust digital and
payment infrastructure to support seamless processing at entry points.
Key priorities include:
(i) real-time data capture and verification systems
(ii) integration with global payment networks to enable international transactions
(iii) reliable and secure payment processing at ports of entry
(iv) backend integration across immigration and security databases
Strengthening these systems will be critical to ensuring that the VoA framework is

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 80
operationally efficient, scalable, and secure, while also addressing existing friction points
in the visa application and payment process.
8.4.5 Enhancing Visitor Retention and Experience
Visa facilitation may be complemented by measures to enhance visitor retention and
long-term engagement, particularly for high-value travellers.
This includes:
(i) introduction of loyalty programmes for repeat visitors
(ii) faster and differentiated processing for frequent travellers
(iii) integration of visa systems with tourism platforms and visitor services
(iv) Tourist Refund Scheme (TRS) allowing international visitors to claim back GST
(Goods and Services Tax) paid on purchases made in India.
Global experience indicates that repeat visitors contribute disproportionately to tourism
revenues. By enabling easier re-entry and improving the overall travel experience, India
can increase the lifetime value of each visitor and build sustained tourism demand.
Singapore | Digital infrastructure improves clearance scale
Singapore’s Immigration & Checkpoints Authority (ICA) has progressively digitised
the traveller journey; the MyICA Mobile app is a one-stop access point for immigration
e-services
151
and the SG Arrival Card (SGAC) is the digital pre-arrival submission
form
152
.
MyICA enables SGAC submission and allows travellers to scan the passport bio page
to prefill details; it also supports group submission and record retrieval. ICA’s portal
provides status-check and enquiry services (application status, pass/permit status, e-pass
enquiries, etc). Singapore’s international visitor arrivals are derived from SG Arrival
Cards and compiled from immigration movement records.
ICA cleared 192.8 million travellers in 2023 and 230.4 million travellers in 2024,
while reporting that clearance experience generally improved due to these initiatives
(including automated lanes and digital processes)
153
.
151 MyICA Mobile Application. https://www.ica.gov.sg/public-education/myica-mobile
152 SG Arrival Card (SGAC). https://www.ica.gov.sg/enter-transit-depart/entering-singapore/sg-arrival-card
153 ICA Annual Statistics. 2024. https://www.ica.gov.sg/docs/default-source/ica/stats/annual-stats-report/ica-annual-statistics-report-2024.
pdf?sfvrsn=431ee247_0

Conclusion

UNLOCKING GROWTH IN TOURISM AND HOSPITALITY SECTOR 83
9. Conclusion
India’s tourism sector stands at a critical inflection point. While the country possesses
a rich, diverse and globally competitive tourism offering, its full potential remains
constrained by regulatory complexity and frictions in international accessibility. Bridging
this gap is essential to unlocking growth, enhancing competitiveness and strengthening
India’s position in global tourism flows.
The analysis in this report highlights that the constraint is not one of demand or underlying
assets, but of enabling conditions. On the supply side, regulatory fragmentation,
duplicative approvals and high compliance burdens continue to slow investment, delay
project execution, and limit the scale and quality of tourism infrastructure. On the demand
side, despite progress through mechanisms such as E-Visa, India’s visa regime has not yet
evolved to match the accessibility, scale, and user experience offered by leading tourism
economies, particularly in facilitating repeat and high-value travel.
The reforms outlined in this report therefore focus on two complementary and mutually
reinforcing levers: regulatory simplification and visa facilitation. Together, they represent
a transition from a system characterised by procedural complexity and fragmented
governance to one that is predictable, transparent, and visitor-centric.
On the regulatory front, rationalising requirements, eliminating redundancies, and
streamlining approval processes can significantly improve the ease of doing business in
tourism. This, in turn, will enable faster capacity creation, reduce project timelines and
costs, and support the development of a more competitive and diversified tourism supply
base.
Complementing this, a more facilitative visa regime characterised by simplified design,
improved user experience, expanded access, and repeat-friendly structures may reduce
friction across the traveller journey and improve conversion from travel intent to actual
visits. Scaling visa facilitation in line with global benchmarks will be critical to enhancing
India’s international accessibility and competitiveness.
Importantly, these reforms are not merely administrative improvements; they are central
to strengthening India’s tourism value proposition. A streamlined regulatory environment
can drive investment, formalisation and service quality, while an efficient and predictable
visa regime can significantly improve international perception and ease of travel.
Progress in these areas can be achieved through coordinated action across Union and State
governments, with several reforms implementable through administrative rationalisation
and improved alignment of existing frameworks. Ensuring consistency across jurisdictions
will be key to delivering a seamless experience for both investors and travellers.
As India advances towards its broader economic and development goals, tourism has
the potential to emerge as a major driver of growth, employment, foreign exchange, and
regional development. Realising this potential will depend on the country’s ability to
create an ecosystem that is efficient, accessible, and globally competitive. The reforms
proposed in this report provide a clear and actionable pathway towards this objective,
with regulatory transformation and visa facilitation forming the foundation for positioning
India as a leading global tourism destination.

NOTES

NOTES