National Restaurant Association of India (NRAI) has written to the finance minister Nirmala Sitharaman to seek support for the industry in the union budget. The letter states restaurant industry is a significant contributor to the national economy and one of the highest employment creators in India, currently employing over 7.2 million Indians directly in the sector. The industry body asserts with an annual turnover of approximately Rs 4.23 Lakh crores, the restaurant industry, is the third largest after retail and insurance in the services segment.
Nirmala Sitharaman (File photo) National Restaurant Association of India (NRAI) has written to the finance minister Nirmala Sitharaman to seek support for the industry in the union budget. The letter states restaurant industry is a significant contributor to the national economy and one of the highest employment creators in India, currently employing over 7.2 million Indians directly in the sector.The industry body asserts with an annual turnover of approximately Rs 4.23 Lakh crores, the restaurant industry, is the third largest after retail and insurance in the services segment. It argues if the sector gets a certain amount of policy and budgetary support during the upcoming budget, it will propel the sector towards an accelerated pace of growth. NRAI highlights a few issues, if addressed in the budget, will be of help towards the development of the sector. Important demands raised in the letter are restoration of GST Input Tax Credit (ITC) arguing it is the only industry to be pegged at 5% GST without availability of ITC. “The lack of ITC not only reduces the operating margin of the business significantly, it also enhances the capital budget for a new project significantly. This increased project cost slows down the expansion plans, which massively impacts the overall growth of the sector,” the letter argues. Second demand of the industry is reinstating Service Export from India Scheme (SEIS). NRAI explains the industry generates a substantial amount of foreign exchange for the country through forex denominated credit/debit cards. The SEIS scheme has been discontinued recently, letter says and requests, the same to be reinstated with a duty credit of 10% of the forex earned by the restaurant entities to boost Industry’s growth.A long pending demand of the restaurant industry has been separate food services Ministry/Department. “We firmly believe that this could change the face of the Industry and add tremendous impetus to the organised growth of this sector. One of the biggest stumbling blocks to the sector is lack of a single ministry that can help it grow in a planned and focused manner. It is a highly regulated industry with policy and procedural interventions coming across levels ranging from local municipal authorities to union ministry. This is not only goes against the very ethos of ‘Ease of Doing Business’ that the Government espouses but it also leads to problems arising out of conflicting directions coming from different authorities. This significantly enhances the compliance burden, thus negatively impacting the growth,” NRAI asserts. It further argues there are other sectors who contribute much lesser to the national exchequer and employment generation but have dedicated ministries for themselves.
Owing to the size of revenue and employment generation, restaurant industry has requested grant of industry status. The letter argues that “Given the immense contribution of the Food Services Industry to the Country’s economy, it should be accorded an industry status. This will bring in multiple benefits through Central or State industrial policies including easier finance, special schemes, subsidies, fast track clearance processes etc. It will also encourage enterprise as well as entrepreneurship.”
Other demands raised in the letter are reduction of GST on bagasse and other eco-friendly materials, reduction of GST on commercial rentals (Revenue Share), rationalisation of Licenses/NOCs, equitable and fair E-Commerce policy and longer operating hours. NRAI also suggested targeted subsidy schemes and access to debt financing for small and medium enterprises be made available to restaurant industry and an employee welfare plan as there are no special packages or welfare funds or pension plans for the employees in this industry.Kabir Suri, President of NRAI and co-founder and director of Azure Hospitality Pvt Ltd. says, “The growth of the Food Services Industry in India holds immense potential. The industry not only plays a pivotal role in contributing to Government revenue but also is one of the largest employers in the country. Balanced, fair and equitable policies by the Government with respect to GST Input Tax Credit, Rationalised Licensing norms and E-commerce policy will not only benefit businesses and consumers but also make a substantial contribution to overall economic growth and employment opportunities.” Suri added, “I hope that the Hon’ble Finance Minister will consider our requests favourably for boosting growth of the industry. I believe that our suggestions for a dedicated Ministry/Department for the restaurant industry could be a game-changer, and will lead to an exponential growth of the sector.”
