Iran war disruptions, Modi’s appeal to boost India’s hospitality sector
Hello, this is Priyanka Salve, writing to you from Singapore.
Welcome to the latest edition of “Inside India“ — your one-stop destination for stories and developments from the world’s fastest-growing large economy.
The conflict in the Middle East has affected India’s economy, with Prime Minister Narendra Modi urging citizens to curb overseas travel, save fuel — and even pause buying gold. This bleak-sounding appeal is proving to be a boon for India’s domestic travel and tourism industry.
Read on!
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The big story
The conflict in the Middle East is causing India acute economic pain, with its currency weakening, the import bill rising, and mounting concerns over a slowdown in growth.
But there is a silver lining: the domestic tourism industry is showing signs of a boom.
Earlier this month, Indian Prime Minister Narendra Modi urged citizens to reduce overseas travel in an attempt to conserve India’s foreign exchange reserves, under strain from a rising import bill amid a surge in global energy prices.
The Indian rupee is among the worst-performing currencies in Asia, falling over 6% year to date against the greenback, LSEG data showed. This weakening of currency, combined with inflated jet fuel prices, has also led to one of the country’s major airlines, Air India, to cancel more than a quarter of its international flights between June and August.
All this coincides with the peak season for Indian tourists travelling abroad, experts told CNBC, adding that as schools remain shut for more than a month, it is easier for families to take longer holidays to escape the Indian summer heat.
Indian Hotels Company, the country’s largest hospitality group and parent of luxury chain Taj Hotels, told CNBC’s “Inside India” that Modi’s exhortation will “benefit the domestic tourism industry.”
Domestic travel boom
Indian travelers have already started choosing local destinations, industry leaders and sector experts told CNBC.
“Domestic travel has gained prominence, with 42% of travelers opting to explore their own countries. This trend, [is] notably observed in India, China, and the United States,” according to a report by global travel insurance major Allianz Partners earlier this month.
That trend might reflect a “preference for cost-effective travel options while enjoying familiar landscapes and supporting local tourism industries,” the report, based on a survey conducted by Ipsos, said.
Several hospitality operators in India confirmed the trend and are reporting sharp improvement in occupancies and room prices from May onwards.
A woman poses for photographs against the backdrop of landmark Hawa Mahal or “Palace of Winds”, at a rooftop cafe in Jaipur on May 2, 2026. (Photo by Manan VATSYAYANA / AFP via Getty Images)
Manan Vatsyayana | Afp | Getty Images
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