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Restaurants urge FM for support as job losses across 500,000 outlets loom

National Restaurant Association seeks tax credits, low-cost finance in a half-hour video conference call with Sitharaman

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Nirmala Sitharaman | NRAI | restaurants

Pavan Lall  |  Mumbai 

Several restaurants offer great world cuisines
The NRAI also appealed for the government to restore input tax credit for GS for the sector | representative image

Restaurateurs on Thursday demanded restoration of input-tax credit, low-interest finance, and other measures, during a videoconference meeting with Finance Minister on issues impacting the sector due to the lockdown.

The National Restaurant Association of India (NRAI) claimed the lockdown was not only choking their revenue stream but would also lead to massive job losses in the sector.

President Anurag Katriar said the discussion that lasted half an hour zeroed in on policy and liquidity support needed to revive the industry. “The finance minister suggested we address issues more urgently, and look at larger policy issues at a later date,” he said.

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“We had asked for a new e-commerce policy for the sector, which will be reviewed later. However, the force majeure element in the business is likely to be addressed sooner.” This is similar to the invocation of force majeure made in the real estate sector.

The meeting was also attended by the economic affairs secretary and the revenue secretary. The delegation comprised Katriar, trustees Riyaaz Amlani, Rahul Singh, and restaurateur Anjan Chatterjee.

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Some of the key talk points included allowing for finance for the industry, lower industry rates as well as a six-month moratorium, Katriar said, citing that there was little or no liquidity in the industry.

Employment support was specifically requested for lower-end employees through the Employees State Insurance Corporation (ESIC). Of around 32 million beneficiaries of the ESIC scheme, over 5 million belong to the hospitality sector.

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“People can forget that the mortality rate in the restaurant business is at 80 per cent, so only the remainder is on a strong footing to start with," Katriar said. “The other point is that Ebitda is just at 15 per cent on an average, and when fixed overheads that include rent per and utilities are at 50 per cent, you lose six months earnings with a two-month lockdown and zero business."

The appealed for the government to restore input-tax credit for GS for the sector. “It was there earlier and taken away, and government officials indicate it will be reconsidered,” Katriar said.

Zorawar Kalra, founder of Massive Restaurants, said: “This is a very important sector that employs 7.3 million people and contributes around 3 per cent of GDP to the economy. If we are to go by what some surveys are saying, that anywhere between 40 per cent and 45 per cent of eateries may not even reopen. It could then lead to a lose-lose situation for the country,” he said. “But we are hopeful and do expect that some help will be coming our way. It is needed.”

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First Published: Fri, May 22 2020. 18:04 IST
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