India's travel industry braces for hit from Modi's appeal to avoid foreign trips

By Praveen Paramasivam and Sai Ishwarbharath B

CHENNAI/BENGALURU, India, May 13 (Reuters) - India's travel industry fears that an appeal by Prime Minister Narendra Modi to avoid unnecessary foreign travel will squeeze new bookings after inflationary pressure knocked down summer overseas inquiries by as much as 15%, industry and analysts say.

The pullback is set to hit the peak season for outbound tourism, when affluent families seek cooler locations in Europe and Australia, during school holidays that run from April to June.

"The prime minister has a great following, and people sometimes take his advice very seriously ... they may postpone it to next year," said Ravi Gosain, president of the Indian Association of Tour Operators, with more than 2,000 members.

"We (had) already seen a 10% to 15% reduction in inquiries or business for this summer season."

The travel pullback is unfolding against a backdrop of rising global inflation, with crude oil trading above $100 a barrel after Iran's closure of the Strait of Hormuz choked off a fifth of global supply of oil and liquefied natural gas.

On Sunday, Modi also called for people to ease back for a year on fuel consumption and purchases of gold jewellery, in an effort to trim India's import bill of nearly $1 trillion during the Gulf crisis.

TRAVEL STOCKS SEE SELL-OFF

His appeal spurred investors to dump travel aggregator stocks such as EaseMyTrip EASM.NS, Yatra Online YATR.NS and Ixigo LETR.NS on Monday, along with those of airline operators and holiday planners.

Air fares have already risen sharply, with carriers hiking fuel surcharges, making overseas travel more expensive even before factoring in costlier hotels and transport overseas.

India's tourism sector worth $231.6 billion, which supports a tenth of its jobs, is the world's eighth largest and is projected to climb to fourth place within the next decade.

The outbound segment separately is expected to reach $55.39 billion by 2034 from $18.82 billion a decade earlier, the industry estimates.

PRESSURE TO PROMOTE DOMESTIC TOURISM

Modi's call may boost pressure for the industry to promote low-margin domestic tourism, which accounts for just a fifth of a typical agent's business, said Sunil Kumar, president of the Travel Agents Association of India.

Industry bodies also urged the government to boost inbound tourism to offset foreign exchange outflows.

India's outbound departures rose nearly 6% to 32.7 million in 2025, extending a trend of long-term growth, driven by rising incomes, easier visa access and social media influencers.

By 2027, India is expected to become the fifth largest outbound market, up from 10th in 2019, Ernst & Young said in a report, citing research and brokerage firm Bernstein.

Modi's speech could give a fresh boost to momentum towards domestic tourism, EaseMyTrip said in a statement.

However, analysts say it is a plea, rather than a policy change, though they expect near-term pain.

"This is definitely going to have an impact in the short to medium term," said Kranthi Bathini, director of equity strategy at WealthMills Securities. "But if there is a cool-off in crude oil prices, we can see a rebound."