The National Restaurant Association of India (NRAI) supports the government’s initiative to reduce income tax, resulting in an estimated savings of Rs. 1 lakh crore for citizens. This move is expected to significantly increase discretionary spending, thereby benefiting the restaurant industry.
The NRAI also commends the government’s focus on tourism and its grant of infrastructure status to hotels. However, the restaurant sector, which is an important part of the hospitality industry, has once again been overlooked. NRAI expresses disappointment that the restaurant industry was not classified as a labour-intensive industry, despite being the second-largest employer in the services sector, directly employing nearly 9 million people.
Sagar Daryani, President of NRAI said “Restaurant footfall had been declining over the last year. Now there will be more money in people’s hands. The new tax breaks for consumers in the country will encourage the middle class to eat out more. Businesses will become more profitable as foot traffic in malls and restaurants increases, spurring additional job creation. On the other hand, we are disappointed that the GST Council has not yet responded to our request for input credit. This remains the single most significant obstacle to our sector’s growth.”
He additionally highlighted “the high mortality rate of Indian restaurants, with more than half closing within the first 24 months, owing to high operational costs and a lack of GST input credit. We hope that the GST Council will prioritize our input credit demand in the future. This much-needed reform would go a long way toward improving sustainability and lowering restaurant closure rates.”
Pranav Rungta, Vice President NRAI stated “We hope to see a significant portion of this additional benefit flow into industries like ours. Our projected growth rate of 8.3% could potentially increase to 10-12% with this boost. The restaurant industry’s contribution to job creation and economic activity, highlighting how increased disposable income might accelerate post-pandemic recovery. However, the sector remains disappointed, as its long-standing request for industry status was once again ignored. Recognizing the restaurant industry as labour-intensive would have significantly boosted employment opportunities.”
Overall, the NRAI sees this as a mixed bag budget for the restaurant sector. The restaurant industry has made a significant contribution to India’s economic growth, employment, and entrepreneurship. On behalf of the fraternity, we urge the Hon’ble Finance Minister and the Government of India to prioritize recognizing the industry’s challenges and implementing necessary policy measures to ensure long-term sustainability.