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Only 1 in 5 eateries in the country has a food safety licence

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Mumbai|New Delhi: Only one in five eating out places in India has a food safety licence, which has compelled the Food Safety and Standards Authority of India to speed up registration of small businesses. Of the 2.49 million food business operators (FBOs) in the country, only 467,000 have an FSSAI licence, according to ‘NRAI India Food Services Report 2019’. The survey of FBOs covered restaurants, eateries, dhabas and kiosks, among other channels.

Last week, FSSAI asked the Food and Drug Administration across states to issue licences within two months of an application being filed if no inadequacy is found. It also said that petty food businesses can start operations if registration is not granted or denied. Alternatively, if inspection is not ordered within a week or no decision is communicated within a month, they may start their business, according to FSSAI’s letter to commissioners of food safety of all states and union territories. A copy of the letter was reviewed by ET.

“FSSAI has received representations from food business operators regarding non-issuance or nonprocessing of their licence and registration within a stipulated timeframe. This causes undue inconvenience and delays in commencing food businesses by FBOs,” said the letter. Pawan Kumar Agarwal, CEO, FSSAI, confirmed the details.

India’s food service sector generates business worth about Rs 4.23 lakh crore every year but 65% of the industry is still unorganised. NRAI expects the share of this unorganised segment to drop to 57% by 2023. “These unorganised establishments are not registered under FSSAI or GST, and do put public health and tax at risk. With consumer awareness, FSSAI’s vigilance and delisting by aggregators, we see this tilt towards a much needed formalisation of the sector,” said Rahul Singh, president of NRAI.

In fact, nearly half the licensed eateries are in just two states – Tamil Nadu with 116,000 FBOs and Maharashtra with 90,530 FBOs.

In 2018-19, food service players paid about Rs 18,000 crore in tax, which is nearly 12% of the overall organised market.

This is despite more than two-thirds of India’s top restaurants and cafe chains either saw losses widening or posted lower profit during FY18 due to the rollback of input tax credit (ITC), inflationary pressures, hyperlocal delivery services, and overheads such as steep rentals.

Unlike the unorganised restaurant businesses which purchase raw material in cash, the organised segment was hit by the inability to claim tax credit. This resulted in the cascading of tax as well as price increases for consumers.

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