The Restaurant sector is seeking industry status and restoration of input tax credit from the government. In a letter written to the Finance Minister Nirmala Sitharaman, the National Restaurant Association of India (NRAI) has sought certain policy and budgetary support to fuel the growth of the industry including simplified licensing regime and targeted subsidy scheme.

The industry body has said that in addition to the existing 5 per cent slab without ITC, a new slab of between 12 per cent and 18 per cent GST with ITC can be introduced for restaurants not located in hotels with room tariff of more than ₹7,500. It has also asked that the restaurant industry should be excluded from the applicability of the recent notification for GST on Commercial Leases through Reverse Charge Mechanism since it does not get input tax credit.

It has also recommended reinstatement of the SEIS (Service Export from India Scheme) with a duty credit of 5 per cent of the forex earned by the restaurant entities.

NRAI has also said that given the size and contribution of the food services industry to the economy, it should be accorded an industry status. It has also sought a targeted subsidy scheme and access to debt financing for SMEs to enable struggling restaurants, particularly in smaller towns and cities, to reduce operational costs.

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.”

It has also sought a simplified and standardised licence policy – applicable across the country which should cover issues related to Food Safety, hygiene, environment, human safety, labour and taxation.

According to the NRAI India Food Services Report 2024, the industry is expected to reach ₹7, 76,511 crore and grow at an 8.1 per cent CAGR by 2028, making it the third-largest food services market globally. The industry, which now accounts for 1.9 per cent of India’s GDP and employs 8.5 million people, is predicted to produce more than 10.3 million jobs by 2028.