The key problems in restaurant sector include multiple taxation, exclusion of liquor from GST, variations in excise policy in different states and limited foreign exchange benefits.
The National Restaurant Association of India (NRAI) organised an event on Wednesday to launch the ‘NRAI India Food Services Report 2016’ (NRAI IFSR 2016). The chief guest was Amitabh Kant, CEO of NITI Aayog. Commissioned by the NRAI and compiled by Technopak, NRAI IFSR is a comprehensive trade report on the Indian food services sector.
Kant after releasing the report said that the restaurant industry alone will contribute 2.1 percent to the GDP of India by the year 2021. India’s exponential growth and consumption in terms of frequency of eating out and experimentation with cuisines and concepts has given the Food & Beverage services sector such a fillip that it is estimated to be worth $48 billion in terms of overall market size.
“As we see rapid urbanisation in the country, the gastronomical sector is going to boom in India. Restaurant sector is going to have a very big share in growth. The food sector provides highest in manpower requirement in the hospitality sector, and a huge impetus to other sectors like agriculture, food processing, supply chain, logistics, real estate sector etc. Therefore there is an imperative need for a paper that documents the various developmental parameters of the industry,” he said.
He pointed out that the restaurant sector is the third largest industry after retail and insurance in the service sector. The tourism ministry should ensure things are simple and easy for restaurants. This includes getting licenses which is currently very difficult and complex. “We at NITI Aayog will be happy to work with the tourism ministry as it is critical to provide assistance support and facilitation to the restaurant industry,” he added.
Riyaaz Amlani, president, NRAI, said, “The total food services market today stands at Rs 309 lakh crore and has grown at 7.7 percent since the last report in 2013. This is projected to grow to Rs 500 lakh crore. This year alone, the Indian restaurant sector will create direct employment for 5.8 million people and contribute Rs 22,400 crore by the way of taxes to the Indian economy.”
Rahul Singh, secretary of NRAI, pointed at some problem areas of the restaurant sector like rising prices of onions and tomatoes, real estate (increasing rent for restaurants), liquor licensing, fat tax, and unpredictable demand of consumers. “The problem of licensing is an old one, going on since the British rule. There should be a registration process rather than licensing procedures. It takes up to 100 working days for restaurant owners to get licenses. Also there is a multiplicity and duplication of licensing at central, state and local levels. There should be a single window licensing system which is completely online and responsive.”
He added that the restaurant sector does not come under one ministry but many like tourism, agriculture and finance and commerce ministries.
The key problems highlighted at the conference were multiple taxation, high tax rates, exclusion of liquor from GST, variations in excise policy in different states and limited foreign exchange benefits.
The panelists recommended that there should be an early implementation of GST and that liquor should be included in GST. Not doing so will defeat the very purpose of bringing in a uniform single tax structure and result in double compliance.
