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Ease of doing business progressing very slow : Food service companies

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NEW DELHI: Leading food service operators say doing business in India is still not easy, and that consumption for the industry, which has an annual revenue of over Rs 4 lakh crore, remains a challenge.

“While ease of doing business is making some progress, it’s moving at a slow pace and we continue to be heavily controlled as an industry,” said Unnat Varma, Yum Restaurants-owned Pizza Hut’s newly appointed managing director for Asia Pacific. “Business models are very challenged here and and rentals and labour costs are steep.When investors put the money, a great investment yields returns in 3.5-4 years, and in some cases, it doesn’t.” For doing business in any state, on average a minimum of 15 licences and a maximum of 20 are required.

Officials said the issues aren’t with central regulating authorities, such as Food Safety and Standards Association of India (FSSAI) and the national anti-profiteering authority under the GST, but multiple licences and different policies for different states at various levels.

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“An industry size of Rs 4 lakh crore which contributes over 2% to the nation’s annual GDP and employs over 90 lakh citizens deserves better ease-of-doing business treatment,” said National Restaurant Association president Rahul Singh.

“After unsuccessful pleas to multiple authorities, it’s evident that we need the ascendancy of the prime minister to see light at the end of this rather dark tunnel.” Singh, who is also promoter of The Beer Cafe, added, “Apart from ‘make in India’ and ‘invest in India’, we also have the distinction of ‘serve in India’.”

Some other operators said ease of doing business, lesser regulatory hurdles, and faster returns on investment are making overseas markets more attractive to investors.

“It’s definitely easier to do business outside the country, both in terms of lesser number of licences and easier processes,” said Amit Burman, chairman of Lite Bite Foods, which operates close to 180 restaurant brands including Punjab Grill, Street Foods and Baker Street, and about a dozen outlets overseas across the US, Dubai and a few other countries.

“For us, it’s worse because rentals at airports are 28-30% of top line, which on average is about twice at highstreet locations or malls,” Burman said. Lite Bite runs about half its stores at airports.

Sanjeev Kapoor Restaurants, promoted by chef Sanjeev Kapoor, now operates close to 35 restaurants overseas under the brands Khazana and Signature. Jiggs and Zorawar Kalra-promoted Massive Restaurants is another brand that is increasing its global footprint.

The roll back of input tax credit, ban on liquor on highways, food inflation, and intermittent localised regulations such as clampdown on rooftop restaurants have also impacted growth, industry executives said.

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