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

4 days ago

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 

Over an online video conference that lasted for half an hour on Thursday afternoon with Finance Minister Nirmala Sitharaman and other government officials, and delegates from the NRAI or National Restaurant Association of India went over issues that have tripped up the restaurant industry.

The agenda was to discuss how to tackle the downturn for the sector which has choked the revenue stream for restaurants and may create wide-reaching job losses across as many as 500,000 restaurants. NRAI's President Anurag Katriar said the discussion zeroed in on policy and liquidity support which is needed to kickstart and rejuvenate the industry. "The finance minister suggested we address Coronavirus issues more urgently, and to then look at larger policy issues at a later date," he said. "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.

Apart from the Minister, the meeting was also attended by the Secretary- Economic Affairs Dept and the Revenue Secretary. The NRAI delegation comprised of 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 along with lower industry rates as well as a 6-month moratorium, Katriar said, given that there is little or no liquidity in the industry. Employment support was specifically requested for lower-end employees through the Employees State Insurance Corporation (ESIC) .

Out of approximately 3.20 crores beneficiaries of the ESIC scheme, over 50 Lakh belong to the hospitality sector.

"People can forget that the mortality rate in the restaurant business is at 80 percent so only the remainder are on a strong footing to start with," Katriar said. "The other point is that Ebitda is just at around 15 percent on average and when fixed overheads that include rent per and utilities are at 50 percent you lose 6 months earnings with a two-month lockdown and zero business."

The NRAI also 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.

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Zorawar Kalra, founder of Massive Restaurants says "this is a very important sector which employs 7.3 million people and contributes around 3 percent of GDP to the economy. If we are to go by what some surveys are saying, that anywhere between 40 percent and 45 percent of eateries may not even re-open then it could 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."

NRAI's Wish List

Force Majeure Towards Rent Working Capital Support Employment Pay Support Restoration of Input Tax Credit Income Tax Refund E-commerce Support

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