Apart from contributing significantly to the direct and indirect tax revenues, the restaurant industry is also one of the highest employment creators in India, currently employing over 8.50 million Indians directly in the sector. With an annual turnover of approximately Rs. 5.69 lakh crores, the Restaurant Industry, is the third largest after retail and insurance in the services segment. 

According to the NRAI India Food Services Report 2024, the industry is expected to reach Rs. 7, 76,511 crore and grow at an 8.1% CAGR by 2028, making it the third-largest food services market globally. The industry, which now accounts for 1.9% of India’s GDP and employs 8.5 million people, is predicted to produce more than 10.3 million jobs by 2028. Despite its vibrant growth trajectory, the sector faces several challenges, including Rising Input Costs, Denial of Input Tax Credit, Complex Regulatory Compliances, Delivery Dynamics and Limited Operating Hours.

NRAI, being the Voice of the Restaurant Industry, therefore firmly feels that the industry’s true growth potential can be unleashed through urgent assistance / stimulus provided by the government.  NRAI is confident that not only will this boost the overall size of the sector but it will also generate a tremendous amount of employment opportunities in India. 

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

1. Restoration of GST Input Tax Credit: In addition to the existing 5% slab without ITC, a new slab of between 12% and 18% GST with ITC as the Government deems fit, may kindly be introduced for restaurants not located in hotels with room tariff of more than Rs 7,500/-.
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 08^th October 2024, or for a roll back of the notification.
3. Reinstating Service Export from India Scheme (SEIS): The discontinued SEIS scheme is recommended to be reinstated with a duty credit of 5% of the forex earned by the restaurant entities. 
4. Reduction of GST on Bagasse and Other Eco-Friendly Materials: Reduction in GST on bagasse from current 12% (against 5% for plastic) will largely accelerate the usage of eco-friendly packaging solutions.
5. Reduction of GST on Commercial Rentals (Revenue Share): The current revenue share commercials liable at 18% GST, are recommended for reduction to 5% GST. 
6. Targeted Subsidy Schemes & Access to Debt Financing for SME’s: Consider subsidies on essential ingredients, utilities, and waste management to reduce operational costs for struggling restaurants, particularly in smaller towns and cities.
7. Grant of Industry Status: Given the size / immense contribution of the food services industry to the country’s economy, it should be accorded an industry status.
8. Separate Food Services Ministry/Department: A dedicated ministry /department is requested, which would be able to push for agenda for faster growth of the industry – benefiting all stakeholders. 
9. Employee Welfare Plan: It is requested to have some innovative welfare plans funded by the central and state Government for the employees in this segment to help during employment and after. 
10. Equitable & Fair E-Commerce Policy: Balanced policies and regulations are required to enable a level-playing field where platforms can continue to innovate while restaurants, delivery partners and consumers are protected from potentially exploitative practices.
11. Rationalisation of Licenses/NOCs: A simplified and standardized licence policy – applicable across the country should essentially cover issues related to Food Safety/hygiene; Environment; Human Safety; Labour and Taxation.
12. Longer Operating Hours: Considering the current lifestyle trends/requirements of the citizens at large, the industry be permitted longer/24×7 operating hours across the country.    

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.

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The standout feature of the Interim Budget 2024-25 was its adherence to fiscal discipline, exemplified by the decision to cap Fiscal Deficit for FY2024-25 at 5.1%. Notably, the government’s enhanced capital expenditure to a robust
Rs. 11.11 lakh crore lays the foundation for long-term economic growth.

While not immediately pandering to populist impulses, the budget allocates significantly to infrastructure development and provides incentives for rural housing, agriculture, and fisheries.

The strategic decisions to enhance incentives for rural populace, particularly women, are expected to have a lasting positive impact, enhancing sentiments over the long term. The extension of healthcare coverage under Ayushman Bharat to ASHA and Anganwadi workers, and expansion of the ‘Lakhpati Didi’ scheme’s target to 3 crore women are big positives this year, and will go a long way in empowering rural women and enhancing the quality of life in rural India, thereby ensuring sustained demand for branded consumer goods.

– Mohit Malhotra, Chief Executive Officer, Dabur India

Nurturing Indian Agriculture

The biggest takeaway for the agriculture sector from the Interim Budget 2024-25 is the strong focus to educate, equip, and empower Indian farmers to accelerate the positive transformation in India’s agrarian economy. A farmer-centric approach, as proposed by the finance minister, will help build a sustainable ecosystem.

The budget also underscores India’s commitment to becoming a global millet hub through key initiatives such as ‘Shree Anna’ and the vision of ‘Sahkar se Samriddhi’ that promises farmer welfare and nutrition.

The Agriculture Accelerator Fund for the rural youth and financial allocations for vital support for crop estimation, driven by a tech-focused strategy, further herald an era of increased productivity and profitability for the industry.

– Gaurav Manchanda, Founder & MD, The Organic World

A Farmer-Centric Budget

We extend our appreciation for the government’s unwavering support to our ‘Annadata’ through key budgetary initiatives. The direct financial assistance under the PM-KISAN SAMMAN Yojana and the extensive coverage of crop insurance through PM Fasal Bima Yojana underscore a commitment to the well-being of our 11.8 crore farmers, including marginal and small farmers. The integration of 1361 mandis into the Electronic National Agriculture Market, with a trading volume of Rs. 3 lakh crore, aligns with our mission to modernize agricultural practices and empower 1.8 crore farmers.

The budget’s emphasis on farmer-centric policies, income support, risk coverage, and technology promotion resonates with Madras Mandi’s commitment to fostering a sustainable agricultural ecosystem. We applaud initiatives like Pradhan Mantri Kisan Sampada Yojana and Pradhan Mantri Formalisation of Micro Food Processing Enterprises Yojana, contributing to value addition, employment generation, and the reduction of post-harvest losses.

Madras Mandi looks forward to actively participating in the government’s vision, leveraging private and public investment in post-harvest activities for aggregation, modern storage, efficient supply chains, primary and secondary processing, marketing, and branding. Together, we aim for inclusive, balanced, and higher growth in the agricultural sector.

– Prashant Vasan, CEO, Madras Mandi

Positive for Retail and E-commerce

The Budget reaffirms the government’s growth orientation amid a volatile global environment. The implied backdrop of stability and policy continuity remains a net positive for consumer facing sectors like retail and e-commerce in the long run.

– Zameer Malik, CEO, Kulsum’s Kaya Kalp

Subtle Income Tax Shifts to Boost Retail

While no major direct policy incentives were introduced for retail, income tax tweaks can improve sentiment and spending among urban middle income groups who form the core buying class for branded merchandise.

– Raghunandan Saraf, Founder and CEO, Saraf Furniture

Initiatives to Unleash Growth in Rural Markets

The budget’s focus on buoying rural consumption by raising agricultural credit limits and PM Kisan payouts can unlock major growth opportunities for ecommerce companies in tier 2/3 regions. More money with rural consumers may drive online purchases of goods beyond just necessities.

– Abhinav R Jain, CFO, AdCounty Media

Missed Opportunities

The interim budget speech glaringly missed the opportunity to extend supportive policies specifically around furthering digital infrastructure and online consumer adoption. This remains imperative for deepening ecommerce reach across India’s villages.

– Tejpal Singh Shekhawat, Founder & CEO, Kalyanam Furniture

Control on Commodity Prices is a Commendable Step

The Interim Budget 2024 points to the positive strides made by the government in managing the costs of essential raw materials such as oil, chocolate, sugar, and wheat. The control on commodity prices is a commendable step that fosters stability in the FMCG food market. In particular, I would like to bring back government’s focus on PLI in food processing sector, which will give encouragement to food companies like us to invest more capex and plan more greenfield projects. This initiative is pivotal for fostering growth and innovation within the FMCG industry.

Rationalizing IT slabs to give more disposable income in hand and hence more consumption by the large middle class may help not just Food Companies, FMCGs, but almost all consumption-led industries. We look forward to a budget that not only addresses current challenges but also propels the FMCG sector towards sustained growth and facilitates new investment.

– Saurabh Saith, CEO, Orion India

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