Travel stocks under pressure as India signals push to curb overseas travel

Indian travel stocks came under pressure after Prime Minister Narendra Modi urged citizens to avoid unnecessary foreign travel, cut fuel consumption and defer gold jewellery purchases for a year, as the government sought to ease pressure on the rupee and contain rising import costs.

The remarks, delivered on Sunday, were framed as a national appeal rather than an immediate policy change.

Even so, the market reaction was swift.

Shares of online travel companies including EaseMyTrip, Yatra Online and Ixigo, along with airline-linked and tourism names, fell on Monday as investors moved to price in the risk of weaker outbound travel demand during the peak summer booking season.

The backdrop has made the message more potent.

Iran’s closure of the Strait of Hormuz, reported by Reuters, has intensified concerns over energy costs by choking off a major route for global oil and liquefied natural gas flows.

For India, which is highly exposed to imported energy, that raises the risk of higher fuel bills, a weaker currency and a broader squeeze on discretionary overseas spending.

Travel stocks fall on demand fears

The immediate concern for investors is that Modi’s appeal could alter consumer behaviour at a sensitive time for the industry.

The April-to-June period is one of the busiest for outbound leisure travel, and tour operators are already reporting an early hit to demand.

Ravi Gosain, president of the Indian Association of Tour Operators, said overseas inquiries for the summer season had already fallen by 10% to 15%.

That is a significant warning for an industry that depends heavily on advance bookings and seasonal travel flows.

If households begin to defer foreign holidays in response to the prime minister’s message, travel companies could face weaker volumes just as peak demand should be building.

The concern is not that a formal restriction has been imposed, but that a public appeal from the prime minister may carry enough weight to change spending decisions.

In India, such messaging can quickly influence consumer sentiment, particularly when it is tied to national economic pressure and foreign exchange conservation.

Domestic tourism may benefit

The weakness in outbound travel, however, may also create an opening for domestic operators.

Companies in the sector increasingly expect more travellers to redirect spending within India if overseas trips become more expensive or are seen as less appropriate in the current climate.

Abhishek Biswal, founder and chief executive of EaseMyTrip, said Modi’s comments could add momentum to domestic tourism.

That would not fully offset the pressure on foreign travel bookings, but it may soften the blow for companies that can quickly rework their offerings and push local holiday packages more aggressively.

The industry also expects the government to step up its focus on inbound tourism as a way to offset foreign exchange outflows.

That could eventually support parts of the broader travel ecosystem, even if the short-term effect is negative for firms exposed to international departures from India.

Outbound travel was growing fast

That matters because outbound tourism had been one of the stronger growth stories in the sector.

According to Reuters, overseas departures from India rose nearly 6% to 32.7 million in 2025, extending a longer-term expansion driven by higher incomes, easier visa access and the influence of social media.

The growth outlook had also been strong.

India is expected to become the world’s fifth-largest outbound travel market by 2027, up from 10th place in 2019, according to an Ernst & Young report cited in the copy.

The outbound segment is projected to reach US$55.4 billion (approx. $96.9 billion) by 2034, compared with US$18.8 billion (approx. $32.9 billion) a decade earlier.

Those figures help explain why the market reacted so sharply.

Any interruption to this growth narrative, even if temporary, could affect valuations for listed travel companies that have been positioned around rising outbound demand.

What comes next

In the near term, the industry appears braced for slower international bookings and higher airfares as fuel surcharges rise.

That combination could further discourage households from booking foreign trips, especially while the rupee remains under pressure and oil prices stay elevated.

Analysts still see scope for a rebound if crude prices cool and the macro backdrop stabilises.

Until then, travel companies are likely to respond pragmatically by building cheaper packages centred on domestic destinations and leaning harder into local demand.

For investors, the key question is whether Modi’s appeal proves to be a short-lived sentiment shock or the start of a more durable shift in travel behaviour.

For now, the market is assuming that caution will prevail and that companies exposed to outbound tourism may face a tougher summer than previously expected.