Food service sector to be key part of economy: NRAI

Size of the market was around Rs 3.09 lakh crore in FY16 and is projected to grow at CAGR of 10% to reach Rs 4.98 lakh crore by FY21

Sound macro-economic performance will in turn help the food services sector become a key part of the economy, National Restaurant Association of India (NRAI) said in a report released on Wednesday. The size of the market, organised as well as unorganised, was around Rs 3.09 lakh crore in financial year 2015-16 (FY16) and is projected to grow at a compounded annual growth rate of 10 per cent to reach Rs 4.98 lakh crore by FY21, it said.

"Within this, the unorganised sector holds a 67 per cent share, with an estimated size of Rs 2.07 lakh crore in FY16. However, this is expected to fall and reach Rs 2.93 lakh crore by FY21. The organised sector, which includes chain outlets, standalone outlets and restaurants in hotels, is estimated at Rs 1.01 lakh crore in FY16 and is projected to grow at a CAGR of 15 per cent to reach Rs 2.04 lakh crore by FY21," it said in the report.

The growth of the food services market in India has helped a wide range of ancillary industries, NRAI said.

Real estate for food services has emerged is driving the retail space. "On an average, 25-30 per cent of the retail space in malls is dedicated to food services outlets, which have started to operate on a revenue sharing model with mall operators," the report said.

The food services sector is expected to have generated direct employment for 5.5-6 million people in FY16, which is expected to increase to 8.5-9 million by FY21. Indirect employment has seen a growth at CAGR of four per cent from 2013-2016 and expected to grow six per cent till 2021, it added.

In terms of tax revenue, the chain and standalone segments will contribute an estimated Rs 22,000-22,400 crore in calendar year 2016 and Rs 42,000-45,000 crore in 2021. "The chain market will contribute an estimated Rs 4,800-5,000 crore towards tax in 2016 and Rs 12,000-13,000 crore in 2021," it further said.