NRAI Advises Caution Against Deep Discounting in the Hospitality Sector

The restaurant business contributes significantly to the country's economy in a number of ways, including creating jobs, generating tax income; increasing consumption, boosting tourism, and purchasing goods and services from a number of other sectors and industries that rely on and benefit from it. 

 With nearly 8.50 million Indians directly employed in the sector, the restaurant business not only makes a substantial contribution to direct and indirect tax income but also ranks among India's top employers. In terms of services, the restaurant industry is the third largest after retail and insurance, with annual revenue of over INR 5.69 lakh crores.

The sector is anticipated to reach ₹7,76,511 crore and increase at an 8.1% CAGR by 2028, making it the third-largest food services market globally, according to the NRAI India Food Services Report 2024. By 2028, the industry, which currently employs 8.5 million people and contributes 1.9% of India's GDP, is expected to create over 10.3 million jobs. The industry has a number of obstacles despite its dynamic growth trajectory, such as rising input costs, denied input tax credits, complicated regulatory compliances, delivery dynamics, and limited operating hours.

In addition to expanding the sector's overall size, NRAI, the Voice of the Restaurant Industry, is convinced that this will create a large number of job opportunities in India and is adamant that the government provide prompt support and stimulus to unlock the industry's full growth potential.

In light of the above, the NRAI humbly seeks the attention of the Hon’ble Finance Minister on the following key recommendations, which will be a tremendous help towards the development of the sector:

1.    GST Input Tax Credit Restoration: For restaurants that are not housed in hotels with room rates exceeding Rs 7,500, a new slab of between 12% and 18% GST with ITC, as determined by the government, may be implemented in addition to the current 5% slab without ITC.

2.    Review of Notification for GST on Commercial Leases through RCM: The notification has caused inflationary pressure on most of the smaller restaurants and MSME business owners who were generally renting from unregistered dealers and cannot be in composition due to section 9(5) requirement of being registered. Since the restaurant sector does not get Input Tax Credit, it is requested to either exclude the entire restaurant industry from the applicability of Notification No 09/2024 dated 08th October 2024, or for a roll back of the notification.

3.    Restoring the Service Export from India Scheme (SEIS): It is suggested that the SEIS scheme, which was suspended, be brought back with a duty credit equal to 5% of the foreign exchange profits made by restaurant businesses. 

4.    Reduction of GST on Bagasse and Other Eco-Friendly Materials: The adoption of eco-friendly packaging options would be significantly accelerated by the reduction of the present 12% GST on bagasse (compared to 5% for plastic).

5. Reduction of GST on Revenue Share Commercial Rentals: It is suggested that the present revenue share commercials, which are subject to 18% GST, be reduced to 5% GST. 

6.    SME Access to Debt Financing & Targeted Subsidy Plans: Take into account subsidies for utilities, trash management, and necessary components to lower operating costs for struggling eateries, especially in smaller cities and villages.

7.    Grant of Industry Status: The food services sector needs to be given industry status due to its size and significant economic benefit to the nation.

8.     Separate Ministry/Department for Food Services:  It is proposed that a ministry or department be established specifically to lobby for policies that will accelerate the industry's growth and benefit all parties involved. 

9.     Employee Welfare Plan: To assist the workers in this sector both during and after employment, the federal and state governments are asked to sponsor various creative welfare programs.

10.    Fair & Equitable E-Commerce Policy:  To create a fair playing field where platforms may keep innovating while safeguarding eateries, delivery partners, and customers from potentially exploitative activities, balanced laws and regulations are needed.

11.    Justification of Licenses and NOCs: Issues pertaining to food safety and cleanliness, the environment, human safety, labor, and taxes should all be covered under a streamlined and uniform license policy that is applicable nationwide.

12.    Extended Operating Hours: The industry should be allowed to operate longer, round-the-clock hours nationwide in light of the contemporary lifestyle trends and needs of the general public.    

Sagar Daryani, NRAI President stated, “The food services industry is critical to India's economy, providing significant revenue to the government, employment, and consumption. Despite its potential, the sector faces challenges which restrict its growth and expansion. To address these challenges, timely support and reforms are required. Balanced and fair policies will not only unlock the industry's maximum potential but will also ensure long-term growth, benefiting millions of employees, consumers, and businesses while reinforcing its position as a key economic driver.”

He 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.
 

By Nusra

The ongoing rift between restaurateurs and food aggregators such as Swiggy and Zomato took a fresh turn on Tuesday, with restaurant association questioning if the startups are making consumers ‘discount addicts.’

Deep discounts were among the issues discussed at the first taskforce meeting held by the National Restaurant Association of India (NRAI) where they met top food aggregators including Swiggy, Zomato, Foodpanda and Uber Eats.

“National Restaurant Association  of India’s (NRAI) Delivery Task Force had its first meeting with Swiggy, Zomato, Uber Eats and Foodpanda today. Concerns of the standalone and chain business operators regarding deep discounting, data masking, rights to use own logistics, private labels and ad hoc campaigns were put forth,” shared Rahul Singh, President, National Restaurant Association of India regarding the Food Delivery Companies.

He also added that the concerns have been well taken by all of them. “We aim to continue these meetings on a bi-monthly basis for communicating feedback from the restaurant industry to the aggregators to ensure a healthy business environment for all stakeholders,” he further added.

The government’s FDI policy on ecommerce was also tabled at the meeting and the issue of whether any marketplace exercises control over inventory or offers preferential treatment to its own non-restaurant private labels and cloud kitchens was also discussed.

“The restaurant industry consists of lakhs of small businesses, mostly run by small and family entrepreneurs, and their interests need to be kept in mind while looking at this issue,” Singh added.

In the issue of pubs operating within 500 m range around highways, the centre has refused to de-notify the stretches within the city. The union ministry has claimed that there is no bypass to this stretch to qualify to be de-notified, responding to the state government’s plea to de-notify MG Road and surrounding areas in Central Bengaluru.

Although a few claim that these pubs might consider moving to new places. The experts however maintain that ‘moving’ is not a viable option. Reason is obviously the high costs involved in the process. “It is not possible to move lock, stock and barrel to a new location. A liquor store can do it, but not a restaurant/resto-bar. Perhaps the news is arising from the fact that some are opening new outlets in other parts of the city. The question is also, how do you move? It’s going to cost a couple of crores at least, and that is a lifetime’s earning for most of those who have been hit by this ruling. Many of us have spent crores on our outlets to provide the right ambience to our clientele, so we cannot afford to move. It is do or die for us,” says Riyaaz Amlani, President, National Restaurant Association of India.

“When the shutdown happened at the end of June and beginning of July, we were caught by surprise. We were very positive and upbeat thinking that the state government would resolve the issue. The news that we got from the excise department and other government channels was that it was being worked on and apart from that owners from restobars and liquor shops had a long march to the CM’s house, making him aware of the fact that it is not only about the liquor business that families were being deprived of their livelihood. So, we really hoped it would be worked out. But we were terribly disappointed, with the most recent news. Till now, it was all about the next court hearing and how promising the outcome seemed. Now, personally, I am wondering if outlet owners are caught in the political quagmire between the Centre and the state government. Also, since there is no clarity on the issue, we are now forced to take hard decisions. So far, we have not let any of our staff go because of these changed circumstances, but that may happen in the long run”, says Dilip Nair, whose flagship outlet in Koramangala is 490 metres off the disputed stretch.

Riyaaz agrees and adds, “This is a very deliberate attempt on behalf of the Centre. They have no reason for this stretch to be a highway. This is, in fact, not a notified highway. So, it cannot be denotified. It does not come under the jurisdiction of the National Highway Authority of India, which in its own affidavit has stated that the highway begins only after the Silk Board junction. There has been a bypass that has been created and the law states very clearly that if any highway has been bypassed and does not bear the characteristics of a highway, it is deemed denotified. The Centre asked for a lot of clarification and affidavits from the state saying that it will maintain the highway. Now, they are just going stubbornly and maliciously by refusing to denotify. With the introduction of GST, one of the major sources of income for the state government is liquor (apart from petroleum), and the Centre’s stand in curtailing that.” But will this affect the upcoming HC ruling? “We are very optimistic that justice will be done. We are not going to let it go. We are confident of as positive outcome,” says Riyaaz.

The FSSAI has made it mandatory for all Food Business Operators (FBO) to obtain an online registration or license of their establishments for running their business.

A spokesman of the Himachal Pradesh state government has said that all food manufacturers, packers, whole sellers, distributors and sellers, food importers, hotels, restaurants, clubs, canteens. caterers, food transporters, food storage establishments, food processing units etc. were covered under the FBOs.

He said the action would be taken against the FBOs which failed to obtain license/registration before the time limit under the Food Safety and Standards Act, 2006. The spokesman said for more details the FBOs could contact the Chief Medical Officer or Designated Officer or Food Safety Officer of their concerned district.

In a move to make running businesses easier and to cut red tape and end corruption, the Maharashtra government has said permit rooms, eating houses, lodges and swimming pools will no longer be required to take permission from the police to operate. Currently, besides the local civic bodies and excise department, it is mandatory to get police permission for running these businesses.

“The CM (Devendra Fadnavis) has approved the proposal and we expect the rules will be amended very soon,” said principal secretary (home), Vijay Satbir Singh.

As it is doing nationwide, in Maharashtra, the NRAI is lobbying the state government and the Mumbai administration to reduce the number of licences that’s burdening the restaurant industry. The ‘ease of doing business’ is top priority for the association and implementing the single window system is a stated goal for NRAI president, Riyaaz Amlani.

“The industry whole-heartedly welcomes the move by the chief minister. This easing of doing business gives our industry hope. It will increase the excise revenue by 20% as well as VAT too and will also proportionately increase increase employment in our industry which is already the largest employer. This decision is in the overall good of the state,” said Amlani.

Source : NRAI

National Restaurant Association of India (NRAI) is planning to organise a technology-focused symposium – TechIt.

The symposium will be an open platform for restaurateurs and food service operations.

The platform is aimed at giving restaurant owners access to latest technology options and services.

"The idea is to bring all technology solution providers and restaurant owners under one roof to understand how technology can help the restaurant business grow," shared Riyaaz Amlani, President, NRAI and MD, Impresario Entertainment Hospitality.

The event is scheduled to be held on October 26th in New Delhi.

"In today's world, technology has redefined the food industry. With the ecosystem getting wider and more dynamic, food technology is now the binding force, enabling restaurants to be more efficient, increase profitability and customer delight," added Ankit Mehrotra, Co-Founder, Dineout. Customer focus, new revenue areas, efficient operations and growing investment in the food tech space are some of the topics to be deliberated during the event.

The Delhi government is addressing NRAI’s long-pending demands with an offer of an environment conducive to business, including simplified licensing process and planning tourism hubs with focus on hospitality and dining.

National Restaurant Association of India is in regular dialogue with all levels for the Delhi government, from the tourism minister to senior bureaucrats.

There is a definite interest in simplifying the system. The changes introduced this year include migrating the licence renewal process online and approval for microbreweries.

There is a definite agenda for the restaurant-based tourism hubs while a special three-member committee let by finance secretary SN Sahai is looking at the licensing process.

They are expected to submit their report to Delhi Chief Minister Arvind Kejriwal this month.

The NRAI is upbeat, at least with the reassurances by the government since the result on ground will take some time to materialize.

“This is for the first time that so many steps are being taken and we are glad. The result will take a while to show but at least there is movement towards ease of doing business. Not only will this encourage the industry but also increase government revenue, “said Prakul Kumar, Secretary General, NRAI.

Restaurateurs say that multiplicity of agencies, especially for granting licences, is a major point of corruption other than leading to harassment. “While the Centre and previous governments have been talking about ease of doing business, nothing much has changed on ground. Counting all the licensing, permissions and registrations, there are 15-odd types of clearances we require leading to inspector raaj, “said Kumar.

“Several issues are local like dealing with civic agencies. An example is the health licence given by the corporation. When there is Food Safety and Standards Authority of India, why do we need this additional licence,” said Kumar.

After a favourable decision over the Hookah matter in the Delhi High Court last year, the National Restaurant Association of India (NRAI) was pursuing the SLP being heard in the Supreme Court. The Honourable Supreme Court on 8th December, 2014 has again given a favourable decision for NRAI.

This is a landmark judgement in which the Honourable Court has set aside judgements of Bombay, Madras and Gujarat High Courts. In these judgements of the High Courts, restriction imposed on smoking of Hookah with tobacco content was upheld and power was given to Municipal authorities to impose conditions in this regard.

The NRAI was founded in 1982 and is the leading association of the Indian Restaurant Industry. Headquartered at Delhi, it represents both independent and chain restaurant owners and operators in India.

The association in its 32nd year has a pan India presence with over 1,200 members in 20 cities comprising of restaurants, suppliers and educational institutes.