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Delhi-NCR is the No. 1 Market in India’s Over-Taxed, Over-Regulated, Largely Unorganised Food Services Sector That Provides Jobs to 16 Million People


The National Restaurant Association of India releases India Food Services Report 2016 — its most voluminous yet –

NITI Ayog CEO Amitabh Kant, third from right, released the India Food Services Report 2016 of the National Restaurant Association of India (NRAI) in the presence of (from left) NRAI’s Honorary Secretary Rahul Singh, Coca-Cola India’s Venkatesh Kini, NRAI President Riyaaz Amlani, Trustee and Past President Samir Kuckreja, and Arvind Singhal, CEO, Technopak Advisers, the management consultancy that put the report together.

INDIA’S food services markethas grown faster (at 7.7 per cent annually) than the country’s GDP to balloon into a Rs 3,09,110 crore that promises to expand relentlessly at 10 per cent annually to touch the figure of Rs 4,98,130 crore in 2021.

The market, though, is still dominated by the unorganised sector (dhabas and street-side outlets) — down marginally from 70 to 67 per cent between 2013 and 2016, and by Delhi and Mumbai, which together straddle across 22 per cent of it (Rs 65,215 crore). Pegged at Rs 32,885 crore, Delhi-NCR is the country’s No. 1 food services market, ahead of Mumbai, which is Rs 32,330 crore.

The next six cities, measured by population, control 20 per cent (Rs 59,090 crore) — so, eight cities have cornered 42 per cent of a market with a growing appetite for eating out.

All these bits of revealing data (and more) have been packed into the National Restaurant Association of India’s India Food Services Report 2016, the third since 2010 and weighing a kilo this time, which was released at the India Habitat Centre today by Amitabh Kant, CEO, NITI Ayog, in the presence of the NRAI President Riyaaz Amlani, Trustee and Past President Samir Kuckreja, Honorary Secretary Rahul Singh, Coca-Cola India and South-West Asia President Venkatesh Kini, and Arvind Singhal, Chairman, Technopak Advisers, whose team put together the report, which offers for the first time invaluable insights into consumer behaviour, digital and social media trends, and PE/VC funding.

The food services sector provides direct employment to 5.8 million people, and indirect employment to another 7.5 to 8.5 million, and the two numbers are likely to rise to 8.7 million and 9.5-10.5 million by 2021, making it one of the largest employers in the country (providing livelihood to 1.6 times more people than the Railways and 23 times more than Bollywood!).

Restaurants are also among the largest revenue providers to the state, their contribution almost doubling from Rs 11,500-Rs 11,900 crore in 2013-14 to Rs 22,000-Rs 22,5000 crore in 2015-16. Now, if 30 per cent of the unorganised sector moves into the organised part of the business, this figure can go up by another Rs 13,000-Rs 14,000 crore.

The catch, and this may be why the majority of our food providers choose to remain in the unorganised sector, is that restaurants in the organised part of the business are weighed down by multiple taxes at multiple rates.

The VAT rates on food and non-alcoholic beverages swing from 12 per cent to 20 per cent from state to state; those on alcoholic beverages go up to 35 per cent; and the much-criticised service tax, which consumers most commonly confuse with service charge, adds an additional 6 per cent to this burden. All this, in addition to the many licences that restaurants have to pay for annually.

The central and state governments, clearly, see restaurants more as cash cows than as employment creators, and they have done precious little to do away with one major irritant in every restaurateur’s life — the multiplicity of licences and NOCs they need to obtain from different agencies — from 12 to 15, depending on the state, compared with two in Turkey, four each in Singapore and China, five in Thailand and seven in the U.S.

Amitabh Kant, an exceptional bureaucrat who’s famous for his business-first approach to decision-making, advised in a speech punctuated with banter that the NRAI must keep highlighting the jobs restaurants create and their employment potential. “That is the language our politicians understand best,” he said, adding that the sector had become so influential that his daughter, after completing her higher studies at Oxford, now wanted to become a chef.

He then mentioned how the NITI Ayog had infused a sense of competition among the states by measuring them on dozens of indices to rank where each one of them stood on ease of doing business. From this year on, he assured his audience, they would also be assessed on how proactive they were about addressing the issues affecting the food services sector.

That must have been music to the ears of restaurateurs and food services sector top honchos who had gathered in strength for the much-anticipated report.

Source : Indianrestaurantspy.com