Tourism and hospitality stocks traded with mixed performance on Monday, February 2, following the Union Budget 2026-27 announcement. According to Upstox, EIH Ltd gained 0.71%, ITC Hotels rose 1%, while Easy Trip Planners declined 1.85% and Thomas Cook fell 1.44%. This mixed response comes after the Union Budget 2026-27 unveiled comprehensive measures aimed at strengthening India's tourism ecosystem. Finance Minister Nirmala Sitharaman emphasized that "The Tourism sector has the potential to play a large role in employment generation, forex earnings and expanding the local economy."
The core catalyst for the travel sector's surge was Finance Minister Nirmala Sitharaman's proposal to slash the Tax Collected at Source (TCS) rate on overseas tour packages from 5% and 20% to a uniform 2% effective immediately. This move is expected to improve cash-flow efficiency for both businesses and consumers by reducing the upfront tax burden on international travel. On February 1, 2026, Easy Trip Planners' stock responded with an 11% jump, trading around ₹7 per share, while Thomas Cook (India) climbed over 5% to approximately ₹129 per share. The budget also detailed that overseas tour programme packages, including expenses for travel or hotel stay or boarding, lodging, or any similar or related expenditure, saw a tax collected at source (TCS) reduction from 5% on amounts aggregating up to ₹10 lakh and 20% on amounts exceeding ₹10 lakh to 2%. This reduction applies to all tour packages, including expenses for travel, hotel stay, boarding, lodging, or any similar or related expenditure.
The budget outlined significant expansion of medical tourism initiatives, with Finance Minister Nirmala Sitharaman announcing the launch of a Scheme to support States in establishing five Regional Medical Hubs, in partnership with the private sector. These hubs will serve as integrated healthcare complexes combining medical, educational and research facilities, housing AYUSH centres, medical value tourism facilitation centres and infrastructure for diagnostics, post-care and rehabilitation. The initiative is expected to create diverse job opportunities for health professionals, including doctors and allied health professionals (AHPs). Additionally, the budget proposed setting up a pilot scheme for upskilling 10,000 guides in 20 iconic tourist sites through a standardised, high-quality 12-week training course in hybrid mode, in collaboration with an Indian Institute of Management. This pilot scheme aims to standardise training for tourist guides across key destinations.
The budget outlined extensive infrastructure development plans beyond medical tourism. The government announced a seaplane Viability Gap Funding (VGF) scheme to provide operational support to the tourism sector. The budget also proposed developing ecologically sustainable mountain trails in Himachal Pradesh, Uttarakhand and Jammu and Kashmir, along with setting up turtle trails along key nesting sites in the coastal areas of Odisha, Karnataka and Kerala, along with bird-watching trails in Andhra Pradesh and Tamil Nadu. Additionally, the Budget proposed to develop 15 archaeological sites, including Lothal, Dholavira, Rakhigarhi, Adichanallur, Sarnath, Hastinapur, and Leh Palace into "vibrant, experiential cultural destinations." The government will open excavated landscapes to the public through "curated walkways" and introduce immersive storytelling skills and technologies to help conservation labs, interpretation centres, and guides. The budget also proposed establishing a National Destination Digital Knowledge Grid for digitally documenting all places of significance, including cultural, spiritual and heritage sites.
According to Upstox reports, shares of Easy Trip Planners surged 11% on the previous day, emerging as the top gainer in the pack, while Thomas Cook (India) saw gains exceeding 5%. However, on Monday, February 2, the sector showed mixed performance with EIH Ltd gaining 0.71%, ITC Hotels rising 1%, while Easy Trip Planners declined 1.85% and Thomas Cook fell 1.44%. Investors appear to be factoring in higher volumes from improved tourist infrastructure and better last-mile services, along with the government's emphasis on branding and global market linkages through initiatives such as ODOP. The healthcare sector also benefited significantly with Max Healthcare Institute, Apollo Hospitals Enterprise, and other major healthcare stocks posting gains up to 4% following the medical tourism announcements.
Analysts say medical tourism could be a steady, high-margin segment that can lift room demand in metro and tier-1 cities over time, especially for premium hotels. The budget proposals were also read as supportive of long-term capacity expansion in the sector, particularly as private participation is encouraged alongside the states. Mahindra Holidays rose 3% aided by expectations that stronger domestic tourism and skilling initiatives could support sustained growth in leisure travel. The government's strategic focus on tourism, with the UDAN scheme and other infrastructure plans, is projected to support the Indian travel industry's anticipated 9% CAGR growth over the next five years. While Easy Trip Planners shows strong agility and a higher valuation, Thomas Cook (India)'s established presence and lower P/E may appeal to value-conscious investors seeking exposure to India's expanding tourism economy.
