The Restaurant industry with an annual turnover of approximately Rs 4 lakh crore and providing direct employment to over 7 million Indians is in a very precarious situation currently, fighting a grim battle for its basic survival. Seized about its current and future precarious situation, industry association NRAI had written a letter to the Finance Minister on March 21, seeking immediate relief for the small marginal suppliers and for those employed in the sector.
The NRAI says that whereas it has met with partial success on the demands it put before the Finance Minister, there is a long and arduos road to traverse before the industry can be out of the woods. In light of the existing lockdown across the country, which might get prolonged, the problems for the sector are only expected to worsen further. Industry observers apprehend that the spectre of failed businesses and higher unemployment is becoming spookier by the day. The industry body reckons that if there is no interim relief provided now, the situation may lead to some social unrest as well. NRAI also reckons that the business will take 9-12 months post opening to stabilise.
In the letter to Amitabh Kant, CEO, Niti Ayog, and also the Chairperson of Empowered Group for co-ordination with Private Sector, NGOs & International Organisations for response-related activities of COVID-19, the Association has listed out the most pressing issues before the restaurant sector and has bifurcated its concerns into three distinct categories: People Issues, Operating Support, and Policy Support.
In the letter, the NRAI has sought the support of the government to some of its most resonant demands under the current circumstances. These are:
– People Issues: The NRAI has made recommendations for an unemployment pay cover to all employees covered under the ESIC Act in full till lockdown and 50 percent post that till March-2021. It can also be a mix of cash and free food grains/ essentials.
The Association has requested to extend the purview of the scheme announced by the Finance Minister wherein PF contribution of both employers and employees is being borne by the Govt. to now cover a) companies having up to 1,000 employees b) Salary limit to be in line with the minimum wages paid to a skilled labour in the state c) Companies should have at least 50 percent employees working at minimum wages level. With a view to help the finances of its employees, NRAI also recommends enhancing the withdrawal limit from PF up to six month’s gross salary with a max cap of Rs 3,00,000.
Besides, the letter also appeals to the govt. to extend the moratorium on retail loans by employees so as to help them with their cash flows.
– Operating Issues: The NRAI letter asks for a complete waiver of all license fees and minimum rent for utilities for the entire period of lockdown or six months, whichever is higher. It asks for all renewals of license, permits and registrations to be put in abeyance for six months. The NRAI has also sought a discount in the utility rates as a part of the revival package and continues to seek deferment of all statutory payments for managing cash flows.
For meeting the sector’s immediate working capital needs post COVID-19, the NRAI has requested for the easy availability of working capital loans at preferred rates and without asset collateral. It has also reiterated its earlier demand for an early settlement of all insurance claims.
Keeping in mind the severe damage caused by this extraordinary global pandemic – an event which is undoubtedly beyond the control of anyone – the NRAI feels that it is a fit case of force majeure and has requested the Government to make a formal announcement of the same and save precious time on avoidable legal cases post resumption.
– Policy Initiatives: The NRAI has also requested for an immediate restoration of Input Tax Credit on GST, calling it as a long-standing demand of the inndustry. The letter says that the annulment of the input tax credit facility is unfair and hurts not only the restaurants’ operating costs but also their ability to invest in new projects.
The letter calls for a robust and fair e-commerce policy, which not only protects the traditional businesses but also allows them a fair opportunity to trade on these platforms on equitable terms. It says that restaurants need a platform where the buyer and seller decide the terms for transaction and not the platform per se. “The greed of a few heavily-funded enterprises cannot be allowed to hurt an entire sector,” says the letter.
In the letter, the NRAI has also called for the creation of Mega Restaurant Hubs in line with Mega Food Parks, as envisaged under the PMKSY Scheme, by extending the scope of this scheme to the Service Sector as well. Taking this approach, the letter points out, will create revenue and employment and will also bring in fresh investments into the sector. “The role of F&B in promoting tourism is massive and we must work accordingly,” exhorts the letter. It also calls for encouraging domestic investments into start-ups in service sector and to eventually shun the foreign investment mind-set. “Promote domestic risk capital by giving favourable exit preference by tweaking the capital gain taxation,” urges the letter.
Anurag Katriar, President of NRAI, and CEO & Executive Director of deGustibus Hospitality Pvt. Ltd, says, “I congratulate and thank the Government of India for valiantly fighting the battle against the COVID-19 and express our full support as an Industry. We are doing our bit, having leveraged our infrastructure to produce and serve meals to over one million needy people in the past couple of weeks. We will continue with our efforts. However, we being employers to a massive seven million Indians, do feel that it is our responsibility to convey and express our serious concerns to the Government. I am absolutely certain that a seasoned and super-efficient officer like Amitabh Kant will do the needful to not only save the Industry from an imminent collapse but will also provide it a robust policy framework that will eventually propel the sector into growth trajectory in the post-Covid era.” He further added that “Our people’s concerns need first attention while issues around operating needs and policy support also need to be addressed before the lockdown gets lifted for the sector.”
Sharing his thoughts on the matter, Riyaaz Amlani, Trustee of NRAI and CEO & MD, Impresario Entertainment & Hospitality Pvt. Ltd, says, “While our Industry is looking at suffering major losses for the next one year, we have to support the Government in its fight to save lives of the victims of COVID-19 as well as the brave front-line defenders such as Medical Workers, Police Officers, and Essential Service Workers and continue to serve them to the best of the ability. We will have to take the hit on our chin. Our hope now is that the Government will step in and save not just Hospitality and Tourism but the entire value chain from complete destruction.”
Rahul Singh, Trustee of NRAI and Founder & CEO, The Beer Cafe says, “The Restaurant business operates on a deferred expense model. Once a restaurant is set up, all the operating costs are incurred on a credit basis. With zero revenues, there is absolutely no buffer. At this crucial juncture, we need to focus on both lives and livelihood. I implore the Government to share the contagion burden. The SMEs can at best comply with the request to continue employment during the lockdown, but to expect sustenance is not only unfair, but also practically impossible. All stakeholders – Employer, Employee and the Government – will need to make sacrifices and share the financial burden.”