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As the voice of the Indian restaurant industry, we represent the interests of 500000+ restaurants & an industry valued @ USD 4 billion. Whether a chain or independent restaurant, the NRAI is here to help every step of the way. Join us!


‘It takes over two dozen licences and permissions to be able to serve a sandwich … restaurant sector has no support’




Finance ministers of states have been unhappy with the restaurant sector and it showed up in the last meeting of Goods and Services Tax (GST) Council. Rahul Singh, president of National Restaurant Association of India (NRAI), explains the industry’s case to Amin Ali:

Why does the restaurant industry, especially NRAI, seem at loggerheads with the government?

NRAI represents over 1,00,000 restaurants. Being the leading association, we advocate for our members on what matters most for their success and growth – whether that’s protecting their economic interests or sharing best practices and innovation. While it is perceived as being at loggerheads, in reality we are partaking in a meaningful dialogue.

There is certainly a negative perception across media, government functionaries as well as the consumer at large. It is our responsibility to address all concerns. Our collective passion, hard work and shared spirit of hospitality enhances everyone’s quality of life.

Your industry is criticised for makingprofitsandnotpassingonthe benefits to consumers.

In a free market economy any industry is set up to make profits to return the investment made. Unlike others, the restaurant sector has no support of subsidy, sops or loans. It relies solely on hard earned money of individual entrepreneurs to set up business in anticipation of getting a return on investment within three to four years. Fatality rate is very high. Seven out of 10 outlets shut shop before they see their entire term.

Now anti-profit and anti-profiteering terms are being confused. If cost inflates due to raw materials, services, wages or change in tax provisions, that cost adjustment happens on a recurring basis in any business. Menu prices adjustments are also governed by market forces.

An outlet recently increased the price of one dish.

This got talked about whereas the same outlet drastically reducing the price of four other dishes did not find any mention. That is the perception battle we need to fight.

How will you fight this perception battle?

A fragmented industry has higher chances of being seen in a negative light. Restaurant sector is the third largest industry after retail and insurance in the service sector. Currently, only a third of the restaurant industry is organised. As this share increases, we will naturally see the balance shift towards formalisation, compliances to food safety and taxation.

What is your reservation about removal of input tax credit (ITC)?

We applaud the reduction of GST slab to probably the best in the world. This will bring more players into the formal economy as well as create consumer demand. However, the very concept of ITC is central to and is in fact the raison d’être of GST, which is to prevent cascading of taxes (tax over tax). Any increase in cost due to denial of ITC does get passed on to the consumer and is also discriminatory in nature.

There are three B2B service industries closely linked with us, which are banking, insurance and real estate. Post GST, they have been allowed ITC on any supply of goods including capital goods. Banks have not lowered their merchant commissions nor have rents been reduced while they have taken full ITC benefit. In fact, certain markets in India are feted for charging high rents with media articles celebrating how they are among the top 10 rentals in the world. Nobody seems to be questioning their profiteering. If they lower the cost to us, we will be more than happy to pass the benefit on to consumers. Paradoxically, we do operate in an environment with first world rentals and third world sales.

ITC also makes us a quasi-gatekeeper for the government. In order to claim tax credit, we were ensuring that everyone from our landlords, supply chain, even the unregistered vendor, to transporters complied with GST to be able to avail tax credit. Now we are the only industry without ITC and hope that the taxes we pay our vendors actually reach the exchequer.

What is your expectation from the government?

We are an industry worth Rs 3,52,000 crore which is expected to grow to Rs 5,52,000 crore by 2022. For an industry of this size and generating over 8 million jobs, there isn’t any dedicated ministry. It takes over two dozen licences and permissions to be able to serve a sandwich. All we want is a single window clearance and certainty of business.

Rather than serving our customers, most of our time is spent in running around departments. We have dedicated ministries and policies for IT and every other sector. ‘Serve in India’ does sound less enticing than Make in India, Invest in India or Digital India, but doesn’t it make sense if development and employment are key national priorities?

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