Indian Hospitality Sector: What Foreign Investors Must Know | Doing Business in India | Episode 21

Is India's hospitality sector a high-potential opportunity or a structural minefield for foreign investors?

In this episode of the Veyrah Law series, Ajay Joseph (Partner at Veyrah Law) examines the Indian hospitality industry, a sector valued at approximately USD 24 billion and projected to reach USD 31 billion by 2028. Domestic tourism is the real engine of this market, with over 2.5 billion domestic tourist visits recorded in 2023. Global brands such as Marriott, Accor and Hilton are already expanding their India footprint. The FDI policy is fully open; 100% under the automatic route for hotels, resorts and tourism infrastructure, with no prior government approval required.

But policy is only part of the story. Hospitality in India shares many of the structural challenges present in real estate: state-level approvals with significant corruption exposure, opaque land title risks, related-party transaction concerns in joint ventures and governance limitations among smaller regional operators.

The episode outlines a practical investment framework for foreign investors: SPV-based structuring with a protected cell company at the offshore holding level, rigorous pre-investment diligence covering title, licences and pending litigation, a preference for acquiring existing or distressed assets over greenfield development, the asset-light brand and franchise model as a capital-efficient alternative, geography-specific JV partner selection, forensic review of related-party transactions, and careful structuring of bank finance security.

If you are evaluating the Indian hospitality sector as a foreign investor, this episode provides a candid and structured framework for approaching it with the right safeguards.