Chennai: Summer vacations for Indians to exotic destinations have been severely disrupted, as the West Asia conflict and a weakening rupee have pushed overseas tour package costs up by about 20%. This increase offsets the Centre's reduction in Tax Collected at Source (TCS) on such packages to 2% from earlier rates of 20% and 5%.
Sharp Drop in International Trips
The conflict has also led to a sharp drop in international trips between April and June, the peak summer travel season for Indian families. Rajiv Mehra, general secretary of the Federation of Associations in Indian Tourism & Hospitality (FAITH), stated that outbound travel has been badly hit. "We are seeing a significant drop in demand, with an overall decline of 15%-20% compared to last year (April-June 15, 2026 vs April-June 15, 2025). About 35% of Indians were travelling to the UAE and Gulf region, and that travel is now almost negligible. Travel to Europe has also dropped significantly."
Costly Vacations
"The key reason is the war, which has led to higher oil prices and insurance costs, resulting in expensive airfares. Currency depreciation and visa delays have further contributed to the decline," he added. Sriharan Balan, MD of Madura Travel Service, noted that the US dollar strengthened against the rupee by nearly Rs 10 over the past year—from Rs 84 to Rs 94—making international travel more expensive. Travel fintech SanKash reported that overseas package costs have risen 20%-25% year-on-year across many sectors. "The increase is recent. Till January, most routes were only 5%-10% higher. The real jump came after the West Asia situation worsened," said co-founder and CEO Akash Dahiya.
Shift in Travel Preferences
SD Nandakumar, president & country head - Holidays & Corporate Tours, SOTC Travel, said traveller preferences have shifted. "Far East destinations such as Japan, South Korea, Thailand, Vietnam, the Philippines, China, and Australia-New Zealand remain preferred. Nepal and Sri Lanka, along with domestic travel across Kashmir, Ladakh, Himachal, Kerala, the Andamans, and the Northeast, continue to see steady traction," he said.
