What does the hospitality industry expect from the Budget?

Posted by: IWOHN Team
Category: Latest Updates

As the union budget is to be announced soon, here are details and quotes from the hospitality head honchos

Brands include –

Mirah Hospitality [ Hitchki Resto Bar, Bayroute, Khandani Rajdhani ] | | Finch and Finch BrewHouse | | Brewworks Pvt Ltd [ Love & Cheesecake, Sesami, poetry ]

The brand spokespersons  pen down the challenges faced by hospitality industry in the last few years and their expectations from Budget 2023 :

Quote: Pre Budget expectation and request from Hospitality Industry –

Ruchyeta Bhatia, Co-Founder of Brewworks Pvt. Ltd. (The Company that owns & operates Love & Cheesecake, Poetry and Sesami)

“The hospitality industry is one of the foremost providers of skilled and semi-skilled jobs in the country. The government helped the sector – especially the companies that had taken debt – through the COVID pandemic but there are many structural impediments that remain. Over the next few years, we do expect the hospitality industry to contribute to India’s growth as more consumers urbanise and incomes grow. If the government unshackles the potential of our sector, we are confident of delivering double digit employment and growth to the economy. In particular, we hope the government provides parity on input tax credit for GST. Our sector is one of the highest taxed sectors today – for a sector that provides so much employment, that is a clear impediment to growth. We also hope the government can streamline license requirements – what they’ve done with the labor code should now be replicated for retail regulations – this requires them to work with various state governments but perhaps a start can be made.”

Aji Nair – Chief Advisor and Consultant at Mirah Hospitality (The Company that owns and operates Bayroute, Hitchki Rest Bar & Khandani Rajdhani chain of restaurants). 

“After the two yearlong Pandemic and post-pandemic hurdles, the hospitality industry is gradually coming back to its pre-COVID sales and performance. However, most of the restaurants in this segment are still not financially balanced and are still trying to pay the liabilities accumulated during the Covid and post-Covid period. As we all know this industry was neither prioritized during any pandemic surveillant assistance by the government nor considered in any of the strategic policies for COVID recoveries during and post-pandemic by the Government. There have been several pleads and cries from various organizations supporting the industry to the Central and State Governments. However, for reasons not known, the support was very limited and that made many of the restaurateurs shut down their operations or survive with huge liabilities. Hospitality is one of the country’s most important industries, and millions of families survive through this industry.  It should get its due importance and priorities by the Government in its fiscal, monetary, and administrative policies.

As far as financial policies are concerned, we have been requesting to get us the Input Tax Credit since the time the GST was introduced in the country. More than 95% of Indian restaurants are operating from Leased or rented premises. Right away from the construction period and throughout operations, we have been paying almost 18% of GST on Rentals and other purchases. This ranges from 18% to 28% for various purchases and activities. While all other industries are enjoying the benefits of ITC, only the hospitality industry is kept excluded from this facility.  So, we do expect the Input Tax credit facilities from Construction time throughout operations to be allowed to the industry or else, the GST for our purchases for Projects and Rent should be brought down to the 5% category. This will help us recover at least a minor part of the losses incurred by us during the pandemic, over the next few years. Reduced GST on the construction of restaurants or benefits of ITC, will also invite more investment in this segment which will contribute significantly to the Indian economy and will also help build more employment opportunities in the country.

As far as Human Welfare is concerned, currently, there are no special packages or welfare funds or pension plans for the employees in this industry. The hospitality industry is totally into people service and like any other Government employees, they are also serving the people and contributing to the overall service industry. After a lifelong service in the industry, below 5% of the overall employees have some savings for the rest of their life. The welfare of the remaining 95% of the employees is not guaranteed in any manner. While in work also, other than very limited medical facilities like ESI and self-contributed PF, there are no benefits given to the employees in our industry. Government should come out with some innovative welfare plans funded by the central and state Government for the employees in this segment in such a manner which will help them during their employment and be a support during their retirement life.

Finally, getting approvals and Licenses for starting and operating restaurants in many states and cities is very complicated. We are forced to knock on many doors and be behind the authorities for approvals. There should be a Single Window system for the Licenses and required approvals.

I hope the upcoming Union Budget will take care of these long-awaited supports which will help us further flourish the industry, operate profitably, and attract further investments.”

Quote by Sandeep Katiyar- CEO and Director, The Finch and Finch BrewHouse

”This year is going to be an important financial one as this sees the virtual end and recovery of the 2 year covid period.

People have seen a shift from the usual trends and there’s an expectation of high recovery with fears of recession in the backdrop as well. We at Finch have seen a rollercoaster ride during the 2 years of the pandemic, we stood by our staff and patrons and even made sure that we deliver to those not in our delivery range we would also require the same to be extended to us by authorities

The Finance Ministry must pay attention to the food and beverage industry that now supports ample of employment  and is fuelling growth and adding jobs in the economy. The government must extend loan waivers, grant long term benefits with lower interest to Hospitality industry as this industry have been trampled during the last 2 financial years. The State has to take into consideration that many restaurant brands even had to face shutting down of business. We require ease of licensing and better hours of operation.

We have to be more consumer friendly but many current rules are yet to match that. Also alcohol licensing costs a lot and take months to process. A single window concept that is much talked about can bring about a most required change to the hospitality sector”

Author: IWOHN Team

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