How to Start a Tours and Travels Business in India: A Step-by-Step Guide

The travel sector of India supports a wide range of business opportunities, from independent travel consultants and ticketing agencies to full-service tour operators managing customised itineraries and group travel. Rising domestic tourism, growing corporate travel demand and easier digital access have made it more practical for new entrepreneurs to enter the market with relatively moderate investment. Whether your focus is leisure travel, religious tourism, adventure experiences or corporate bookings, building a successful tours and travel business requires the right mix of planning, registration, vendor partnerships, compliance and customer service.

Why the Tours and Travels Business in India Makes Sense Right Now

Domestic tourism numbers in India have grown steadily over the past decade, supported by improvements in road and rail connectivity, rising disposable incomes and a shift in consumer spending toward experiences over products. The Ministry of Tourism Swadesh Darshan and Dekho Apna Desh initiatives have expanded awareness of domestic destinations and actively promoted new travel routes and experiences, creating a larger and more informed traveller base for agencies to serve.

For entrepreneurs entering the sector, this environment translates into genuine and growing demand across every segment, from pilgrimage packages and adventure travel to corporate MICE and international outbound tours. Unlike many service sectors, travel has strong repeat-purchase behaviour and relies heavily on word-of-mouth. Which means an agency that delivers reliable experiences builds its client base, compounding over time, rather than starting from scratch each season.

Key demand drivers for the sector:

• Rising domestic tourism: More travellers are seeking curated, expert-planned itineraries rather than self-booked trips, creating demand for agencies that deliver structured experiences.
• Corporate travel recovery: Consistent demand for managed business travel, MICE and incentive programmes, with long-term contracts that provide predictable monthly revenue.
• Adventure and experiential growth: Urban travellers aged 25 to 45 are spending more on activity-led trips, creating a premium-priced segment with lower competition.
• International outbound expansion: As passport ownership increases and visa processes become more streamlined, demand for outbound travel is expanding well beyond metro cities.
• Digital distribution: Lower cost of reaching customers online means focused niche agencies are viable without a physical retail presence or a large marketing budget.

Types of Tours and Travels Businesses You Can Start

The right model to start your business with depends on the available capital, existing relationships and how hands-on you are with daily operations. Each of the following types has a different revenue struct

ure and customer base.

Ticketing and Booking Services

Air, rail and bus ticket reservations, along with hotel bookings, earn revenue through commissions and service fees. This is the lowest-overhead entry point in the sector. IRCTC authorisation and airline agency agreements are the core requirements. Growth depends on transaction volume and repeat customers.

Domestic Holiday Packages

Designing itineraries for families, couples and group travellers within India is an accessible starting point for new agencies. Revenue comes from the margin between your package cost and the customer price. Regional expertise and reliable hotel and transport partnerships are the key differentiators.

International Tour Packages

Outbound travel services cover visa assistance, flight coordination and end-to-end itinerary planning for destinations abroad. Margins per booking are higher than domestic packages due to the complexity involved.

Corporate Travel Management

Managing travel bookings, approvals and reporting for businesses generates predictable, recurring revenue through long-term contracts. This segment also includes MICE services (Meetings, Incentives, Conferences and Exhibitions), which typically have higher margins. Corporate clients prioritise reliability and billing transparency over price.

Adventure and Experiential Travel

Trekking, river rafting, wildlife safaris and camping attract urban travellers willing to pay a premium for curated experiences. Safety protocols, vetted local operators and participant insurance are non-negotiable. Deep specialisation in a single destination category or activity type builds a reputation faster than a broad offering.

Religious and Heritage Tourism

Pilgrimage destinations and heritage tours attract a loyal, repeat traveller base with consistent demand across seasons. Reliable logistics and knowledgeable guides are the primary service differentiators. Community networks and religious organisations are among the most effective referral channels in this segment.

Eco-Tourism and Sustainable Travel

Village stays, forest trails and conservation-linked experiences serve urban travellers seeking low-impact alternatives to standard tourism. This segment has lower competition, higher margins and a customer base that values authenticity over price. Partnerships with eco-certified stays and conservation groups are central to a credible offering.

Medical and Wellness Tourism

India attracts international visitors for affordable healthcare and traditional wellness practices, including Ayurveda and yoga. Businesses in this space coordinate hospital bookings, accommodation and post-treatment travel logistics. Structured partnerships with hospitals and wellness resorts are the foundation of this model.

The table below summarises the key financial and operational parameters for each type, to help you identify the right starting point.

As travel businesses expand into segments such as international packages and corporate travel, additional funding may be required for operations, supplier partnerships and marketing. Godrej Finance Limited offers collateral-free Business Loans with flexible repayment options to support growing enterprises. This can help travel entrepreneurs scale operations while managing cash flow more efficiently.

Also Read: Business Ideas You Can Start with Low Investment in India

Step-by-Step Guide to Starting a Tours and Travels Business

Starting a tour and travel business requires careful planning, legal registration, supplier partnerships, and a clear customer strategy. Here are the steps to follow:

Step 1: Define Your Niche and Target Customer

Decide who you serve and what you offer. A focused niche, such as budget family holidays, luxury heritage tours or corporate travel, makes marketing easier and builds a clearer reputation faster. Trying to serve every traveller type from day one spreads resources and obscures your positioning.

Step 2: Make a Travel Agency Business Plan

Your plan should cover services and pricing, target customer segments and how you will reach them, supplier relationships, monthly operating costs and revenue projections for the first twelve months. Include working capital requirements for vendor advances and refund buffers.

Step 3: Choose Your Operating Model

Options include a home-based setup, a physical storefront, an online-first model or a hybrid. Home-based and online-first models suit niche specialists with low capital. A physical storefront builds credibility faster with first-time travellers and older demographics who prefer in-person service.

Step 4: Register Your Business

Select a legal structure based on your scale and growth plans. The table below summarises the main options.

Step 5: Complete Mandatory Registrations

The following registrations are required before you begin operations:

• Register under the Goods and Services Tax (GST) framework if your annual turnover exceeds the applicable threshold; mandatory for most agencies within the first operating year.
• Register under the Shops and Establishments Act in your state if you operate a physical office with staff.
• Obtain Udyam Registration if you qualify as a Micro, Small and Medium Enterprise, which unlocks access to government schemes and credit support

Step 6: Build Supplier Partnerships

Align with hotels, transport operators, airlines, local guides and activity providers. Standardise service expectations through written agreements covering pricing, cancellation terms, liability and quality standards. Maintaining a backup supplier for each critical service category protects your customers when a primary vendor fails.

Step 7: Set Up Technology and Operations

Use a CRM tool to manage leads and bookings. Set up invoicing software, a payment gateway and clear cancellation and refund policies that are visible to customers before booking. A professional website with destination content and an online enquiry form helps improve credibility and customer engagement.

Step 8: Launch Your Marketing Strategy

The most productive early-stage channels for a new travel agency are:

• Optimise your Google Business Profile for local discovery, as most travel enquiries begin with a local search.
• Publish destination guides and itinerary content on your website for organic search visibility over time.
• Partner with housing societies, corporate HR teams and event organisers for group travel mandates.
• Use social media to showcase authentic trip experiences, customer photos and real reviews.
• Build a referral programme that rewards past travellers for recommending your agency.

Licences and Compliance

Requirements vary by business type, location and the services you offer. The following are the key regulatory obligations for a tour and travel business in India.

GST Registration and Rates

GST applies to travel and tourism services across different rate categories. The table below covers the principal rates. Always verify the current rates on gst.gov.in before filing, as the GST Council may revise the thresholds.

Ministry of Tourism Recognition

Ministry of Tourism recognition as an Approved Travel Agent or Tour Operator is optional but adds credibility with corporate clients and lenders. Eligibility criteria include qualified staff, minimum office infrastructure and documented operating experience.

IATA Accreditation

Required if your business handles international airline ticketing directly rather than through a consolidator. IATA accreditation is recognised by corporate clients as a quality marker and gives you direct access to airline inventory and commission structures.

IRCTC Authorisation

Required to book railway tickets as an agent. The authorisation is applied for online via the IRCTC portal and must meet specific infrastructure and eligibility criteria before it is approved.

Foreign Exchange Compliance

If your business handles foreign exchange for international tours, compliance with the Foreign Exchange Management Act, 1999, is required. Operators functioning as money changers must obtain specific authorisation from the Reserve Bank of India.

Consumer Protection Obligations

Under the Consumer Protection Act, 2019, travel businesses must provide accurate descriptions of packages, maintain clear refund policies, appoint a grievance officer and avoid misleading advertisements. These are statutory requirements with legal consequences for violation.

Investment Required to Start a Tours and Travels Business

Capital requirements depend on your operating model, service range and whether you run a physical office or an online-first setup. The table below gives indicative ranges for the main cost categories. Online-first models carry significantly lower setup costs since they eliminate office rent and fit-out entirely.

Working Capital

Working capital covers vendor advances, refund buffers and cash flow gaps during off-peak seasons. A buffer covering two to three months of operating costs is a practical minimum before you begin taking substantial bookings. Seasonal demand swings are a known feature of the travel business and must be planned for from the outset.

GST on Different Income Streams

A tours and travels business can earn income from multiple sources, each with its own GST treatment. Understanding how each stream is taxed helps you price correctly and avoid undercharging for compliance costs.

Tour Packages Sold on a Principal Basis

When an operator sells a packaged tour at a bundled price covering accommodation, transport and sightseeing, GST at 5% applies on the total package value. Input Tax Credit is not available on most input services in this model, making the 5% a real cost that must be factored into package pricing.

Pure Agent Model

Under Rule 33 of the CGST Rules 2017, if a travel agent facilitates bookings on behalf of the customer without marking up pass-through costs, only the service fee of the agent is subject to GST at 18%. This model requires careful documentation to demonstrate that the agent is acting on behalf of the customer.

Commission from Airlines and Hotels

Commission income earned from airlines or hotels for generating bookings is subject to GST at 18%. For domestic airline tickets, the commission is typically 5% of the basic fare; for international tickets, it is typically 10%. These rates vary by airline and agreement.

Rail Travel Agent Services

Service charges collected from customers by rail travel agents are subject to GST at 18%. No commission is paid by the railways to agents; GST applies only to the service charge component collected from the traveller.

Visa and Passport Facilitation

Government fees and consular charges paid on behalf of customers are not subject to GST. The service charge collected by the agent is subject to GST at 18%. Clearly separating the government fee from your service charge on invoices simplifies compliance and customer communication.

Key Challenges to Plan For

No business opportunity comes without its challenges. Being aware of these before you begin helps you plan more effectively.

• Competition from established agencies and online platforms: Large players have entrenched SEO and advertising budgets. Differentiate through niche expertise, transparent pricing and personalised service rather than competing on price.
• Seasonal demand fluctuations: Revenue varies significantly between peak and off-peak periods across most travel segments. Diversify across leisure, corporate and religious travel; maintain a two to three month operating cost buffer.
• Building customer trust as a new agency: First-time customers have no prior experience with your service. Use written itineraries, visible reviews, clear refund policies and responsive communication from day one.
• Cash flow pressure from vendor advances: Hotels and operators require advance payment before customer balances arrive and refund obligations can be unpredictable. Negotiate deferred terms with suppliers and maintain a working capital reserve.
• Vendor reliability failures: Dependence on third-party hotels, transport operators and guides creates service risk outside your control. Maintain backup partners for critical services and include service standards and penalties in supplier agreements.

Financing Your Tours and Travels Business

Expanding a travel agency requires capital at multiple stages. A Business Loan can help cover setup costs, working capital gaps and early marketing investment without depleting your personal savings. Business Loans can be used to fund technology infrastructure, office setup, staff costs during the early months and vendor advance requirements for your first group bookings.

Before applying, use the Business Loan EMI Calculator to estimate your monthly repayment at different loan amounts and tenures. Match your EMI to your projected off-peak monthly revenue rather than your peak-season figures. This prevents early-stage agencies from overcommitting on debt during their first off-season.

If your business model involves booking upscale hotel inventory, conference venues or outbound packages with large advance requirements, a Loan Against Property can be a cost-effective way to unlock capital from an existing asset to fund seasonal working capital needs. For agencies qualifying as a Micro, Small and Medium Enterprise, credit-linked government support schemes, including PM MUDRA Yojana, can also reduce the amount you need to borrow.

Also Read: Everything You Need to Know About Business Loan

Final Thoughts

Starting a tours and travels business requires more than a passion for travel. It demands structured planning, regulatory compliance, reliable supplier relationships and disciplined cash flow management. Sustainable growth comes from building a reputation for dependable service rather than chasing volume from the start.

Choose a niche that matches your expertise and the market you can access. Invest in the right tools, supplier partnerships and compliance foundations before you scale. As your travel agency grows and seasonal demand swings create working capital pressure, having access to the right financing at the right time makes the difference between scaling confidently and being constrained by cash flow

Apply now for a Business Loan.

FAQs

Q.1. How can I start a travel agency in India with low investment?

A. An online-first model focused on a specific niche, such as weekend getaways or corporate travel, keeps setup costs low. Using free or low-cost digital tools, building supplier partnerships and starting from home eliminates office overhead entirely in the early months.

Q.2. Do I need a licence to run a tours and travels business in India?

A. GST registration is mandatory above the applicable turnover threshold and state-level Shops and Establishments registration is required if you have a physical office. Ministry of Tourism recognition and IATA accreditation are optional, but they improve credibility with corporate clients and lenders.

Q.3. What GST rate applies to tour operator services?

A. Tour operator services are taxed at 5% GST on the total package value, with no Input Tax Credit available on most input services. Service charges collected from customers are subject to GST at 18%. Travel agent commission income from airlines and hotels is also subject to GST at 18%.

Q.4. How much working capital does a new travel agency need?

A. A buffer covering two to three months of operating costs is a practical starting point for managing vendor advances, refund obligations and seasonal demand gaps. Online-first agencies with minimal fixed costs can start with a smaller buffer than physical storefront operators.

Q.5. What should a travel agency business plan include?

A. A business plan should cover your niche and target customers, services and pricing, supplier relationships, monthly operating costs, marketing strategy and projected cash flow for the first twelve months, including a working capital estimate that accounts for off-peak months and vendor advance requirements.

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