The Restaurant and food industry seems neglected in the much awaited 2016 budget, despite a high expectation from the government. The industry which contributes largely to tourism in the country and has seen upsurge growth in last two years, was expecting some developments on Goods and Service Tax (GST).
“The Union Budget 2016 was largely agrarian in nature and the restaurant and F&B sector was looking forward to some impetus. While we had also hoped for some announcement on implementation of GST, the industry will be impacted to a limited degree by the increase of service tax, through the introduction of 0.5% agri cess,” shared Riyaaz Amlani, President, National Restaurant Association of India. Though, the industry is working together to promote restaurant’s growth, this addition of the taxes brought hopelessness on their face. GST was the need of the hour which could not get a place in Finance minister Arun Jaitley’s long-awaited budget. Already, restaurants are paying multiple taxes including service charge, service tax, VAT amongst others which has affected the eating out trend in last one year.
“Increase in service tax will affect the spending power of the consumer which will adversely affect the spends done in economy and thus there will be a atmosphere of savings and less expenditure. Economy will deficit and decline thus reducing the GDP also,” added Vivek Aggarwal, Co-owner & Director, The University Bistro Café.
Adding to the same lines, Srikumar Misra, Founder & MD, Odisha based Milk Mantra said, “After the high decibel Start-up India initiative, the budget could’ve followed up with some specific incentives for entrepreneurial risk, i.e. say taxation along the lines of Entrepreneurial Relief as in the UK tax structure.”
However, with allocation of Rs.87k crore, there seem certain benefits for food industry with 100 per cent FDI in processed food retailing on India made food products.
“The FM in this budget has smartly balanced exemptions and taxes for different categories: - Stand up India for instance is going to boost the thriving start up movement further, also, since we work closely with farmers, it is great to see this time the government has focussed on the farmer economic development,” shared Deepanshu Manchanda, Co-Founder, Zappfresh on food industry.
Commenting on the same, Amit Dube, Founder & CEO - FoodAbhi.com said, “100% FDI for food manufactured in the country can bring a pivotal change in Food manufacturing and processing sector by not only creating lots of employment opportunities but also minimizing losses due to bad storage and logistics.”
However, the decision to circulate the Model Shops & Establishments bill to state governments for voluntary adoption is a welcome move and the industry hope to see some traction on it. Achieving a fine balance through traditional businesses and creating newer opportunities through Start-ups are reasons government and its policies are headed towards.