NITI Aayog has proposed a set of reforms to strengthen India’s homestay sector, positioning it as a potential driver of jobs and regional growth as the country leverages tourism for economic expansion. In its report “Rethinking Homestays: Navigating Policy Pathways”, prepared in collaboration with the Internet and Mobile Association of India, the policy think tank has recommended fiscal incentives, simplified registration and renewal processes, and digitalisation of operations to help states build a resilient and inclusive ecosystem for homestays.
The report notes that domestic tourism has surged after the pandemic, with more travellers seeking immersive, community-based experiences. Homestays, it says, offer a unique way to showcase India’s culture while spreading the economic benefits of tourism to local communities. However, the sector faces challenges from cumbersome regulations, inconsistent state policies, and limited access to incentives.
According to NITI Aayog, the homestay market in India was valued at Rs 4.72 billion in 2024 and is projected to grow at 11 per cent annually until 2031. The sector has one of the highest employment multipliers in tourism, creating opportunities not only for hosts but also for local businesses in food, handicrafts, and transport.
Key recommendations include establishing a single-window digital platform for registration and compliance, allowing self-declarations to reduce paperwork, and introducing proportionate registration fees to encourage small operators. The report also calls for homestays to be treated as residential units for utilities such as water and electricity, ensuring operators are not charged commercial rates.
Highlighting best practices from Goa, Kerala and Uttarakhand, which have introduced targeted incentives and simpler frameworks, NITI Aayog recommends scaling these measures nationally. It suggests building clusters of homestays, promoting experiential tourism, and integrating them into state marketing campaigns to position India’s homestay model as both a cultural showcase and an engine of inclusive growth.
