Synopsis: This article highlights the growing corporate travel market in India’s Tier 2 & 3 cities, fueled by rising investment flows and business deals, alongside strategic initiatives from travel agencies and the hospitality industry.
According to reports, the major industries that have the most considerable impact on corporate travel expenses are IT services, BFSI, engineering, aviation, oil and gas, pharma, FMCG, and automobiles. Major corporate travel have in Mumbai, Delhi NCR, and Bangalore still being the preferred business travel spots, emerging corporate centers include Ahmedabad, Vadodara, Bhubaneswar, and Lucknow, among others.
Tier 1 cities all are mature markets. The next emerging cities are tier 2 and 3 cities, growing at 25-67% year-on-year, significantly outpacing the sluggish 2-3% growth in metropolitan centers.
Where Companies are Investing
Corporate travel demand in Tier 2 cities is largely driven by concentrated investments, especially in the manufacturing sector. Which contributing around 17% to the latest GDP. Tier 2 cities have emerged as strong hubs for business travel.
Automotive & Auto Components
Investment n this sector exceeds ₹85,000 crores with approximately 750,000 employees, dispersed across multiple manufacturing clusters.
- Vijayawada (Andhra Pradesh) The city hosted Isuzu Motors India, Hero MotorCorp, Ashok Leyland, and AVERA Energy, with significant auto component suppliers concentrated in nearby Sri City and Satyavedu.
- Lucknow (Uttar Pradesh is home to Tata Motors commercial vehicle division, Honda Cars India, New Holland Agriculture, and Yamaha Motors.
- Coimbatore (Tamil Nadu) operates as the Manchester of South India” housing TAFE Tractors, automotive component manufacturers, and engineering firms.
- Surat (Gujarat), while better known for textiles and gems, is emerging as an automotive and auto-component hub.
The presence of these manufacturers drivers continuous corporate travel for executive rotations, supplier audits, quality control visits and senior management coordination between headquarters and manufacturing sites.
Steel & Heavy Manufacturing
Jaipur(Odisha) stands as perhaps the single most significant investment destination for corporate travel in Tier 2 India. Tata Steel’s Kalingangar expansion alone represents ₹27,000 crore in investing, expanding capacity from 3 MTPA to 8 MTPA, and creating 34,000+ new jobs.The acquisition of Neelachal Ispat Nigam Ltd (NINL) by Tata Steel for ₹12,000 crores not only seals the deal but also consolidates industrial activities in the region.
FMCG & Retail
The major reason why corporate travel to tier 2 cities is largely due to fast-moving consumer goods is the necessity to deal with wide distribution networks, make trade meetings, and supply chain coordination.
- Indore (MP) is the main market place for Central India, where the regional offices of ITC, Hindustan Unilever, and many other FMCG brands are situated.
- Surat is the place for gems and jewellery trading, textiles and chemical manufacturing, all of which need business meetings, supply chain management and trade activity coordination.
The consumption of FMCG in tier 2 and tier 3 cities accounts for 36% of the total in India and it is predicted to reach 45% by 2025.
Pharmaceutical & Healthcare
Pharmaceuticals are shifting their operational bases away from the major metro cities to places like Coimbatore, Visakhapatnam, and Chandigarh, thus increasing the requirement for travel for R&D coordination, manufacturing operations and regulatory purposes. Visakhapatnam is luring pharmaceutical companies with promises of lower operating costs and a good location. This upsizing has resulted in travel for project management, supply chain coordination, and corporate meetings.
IT &Information Technology Services
New IT hubs in Coimbatore, Bhubaneswar, Kochi, Chandigarh, and Guwahati are making a considerable impact on corporate travel demand.
- Coimbatore: The rapid growth of tech parks and startup ecosystems has turned into a secondary IT hub which in turn has created a demand for travel related to client meeting, project execution and training programs.
- Bhubaneswar is becoming recognized as an IT service center with developing Global Capability Centers (GCCs), which has led to a projected growth in GCC demographics of 30-40% demand in Tier 2 cities.
Also read: Affordable Tier 2 & 3 Cities in India That Are Ideal for First-Time Homebuyers in 2025
The Hotel & Infrastructure Boom
Without a sufficient hospitality infrastructure, corporate travel cannot prosper. Hotels and the hospitality sector’s investors are well aware of this and thereby taking the opportunity to upgrade their locations in Tier 2 cities.
- Indore exemplifies the infrastructure boom in Tier 2 cities. Four major hospitality conglomerates are investing more than ₹400 crore to expand hotel inventory from 8,500 room to approximately 10,000 rooms by 2026. This expansion targets the growing MICE (Meetings, incentives, Conferences, and Exhibitions) demand and corporate traveler needs.
- Madhya Pradesh is the sole recipient of ₹4,468 crore investment in tourism and hospitality which is going to be spread over the cities of Indore, Bhopal, Gwalior, and Jabalpur and will be mainly on luxury hotels, conference centers, and business-ready properties.
Jaipur, Kochi, Lucknow, Mysuru, Coimbatore, and Bhubaneswar are among the cities where the hospitality sector is expanding rapidly due to better connectivity (especially the UDAN scheme enhancing regional air access), lower land acquisition costs compared to metros, and increasing demand for both corporate and leisure travel.
Smart Move from Travel agencies
- Yatra’s B2B Corporate Focus: Targeting Tier-2 cities, Yatra is solely focusing on SME and mid-market corporate clients. In Q2 FY26, the firm welcomed 34 new corporate clients with an annual billing potential of ₹261 crores. The company’s decision to focus on Tier-2 cities is based on the realization that small and medium enterprises (which account for 30% of the business travel market) are increasingly being established or operating in non-metro areas.
- MakeMyTrip’s Multi-City Strategy: The myBiz platform of MakeMyTrip is providing corporate travel solutions in several Tier-2 cities, and the company is targeting the leisure and business travel markets at the same time.
- Thomas Cook’s Regional Positioning: Thomas Cook India lists Mysore, Mangalore, and Madurai in the South; Chandigarh, Lucknow, and Jaipur in the North; Guwahati, Indore, and Bhubaneswar in East and Central India; and Nagpur and Rajkot in the West as the main regional corporate travel markets.
Conclusion
The corporate travel landscape in India is being fundamentally reshaped by economic decentralization, manufacturing diversification, and infrastructure development. The Tier-2 cities of Indore, Jaipur, Lucknow, Surat, Vijayawada, Vishakhapatnam, and Coimbatore are changing their role in the market from being secondary to becoming the primary growth engines.
Written by Yatheendra N
