As Union Budget 2023 is nearing all sectors are sharing their expectations from the government and the F&B industry is also not far when it comes to having certain changes in the sector that has been long due.

From reintroduction of an input tax credit, working capital loans, revival packages and much more. Restaurant India went out and talk to industry experts on their expectation from the much awaited budget.

“The food and beverage industry is very Capital Intensive with no subsidies. There is an 18% GST but there is no input credit. This input credit should be allowed so that the gestation period comes down which is very important to survive in an environment that is so challenging and dynamic,” shared Abhay Kewadkar, Managing Director, Fox in the Field Bangalore by adding that the industry suffered a lot during the outbreak of Covid-19 but no benefits were given to the industry as banks refused to entertain even working capital Loans unless collateral were given or the property had a record 3 years of profitability to show. As a result, some businesses that opened just before the pandemic were forced to close.

Also, if we look at the covid assessment report shared by the National Restaurant Association of India, the industry suffered a 53% decline in FY21 over FY 20. The industry employs over 7 million people and still needs a revival package to return to its original strength. 

"For the food and beverage industry to be able to bounce back from this epidemic and prevent further losses, we need a budget that supports interest-free loans, allows greater subsidies and reduces tax structure. Additionally, since most of the Food & Beverage businesses fall under the Micro and Small Medium Enterprise (SME) categories they should be offered extended moratoriums on interest payable,” pointed Debaditya Chaudhury, MD Chowman Hospitality Pvt Ltd by adding that if we look beyond the tax breaks and the interest-free loans, which are both good steps, there can be a lot that this budget could do for us in terms of a relief.

“The industry needs support from government agencies to help them regain their balance sheet health and rethink disaster recovery plans to reduce vulnerabilities and inequities,” he added.

Not only this, the food service industry contributes 3 per cent of India’s GDP and provides a living to more than 7.3 million people. As a result, it is one of the largest employer in the country.

“During the pandemic a lot of hospitality groups had no choice but to take help of the GECL 1 and 2  loans from the bank as per the subscribed guidelines of the govt however looking into the long run of the pandemic and the run rate at which the industry is recovering, the tenure of the GECL should be extended similar to normal term loans to avoid more defaults and restructuring which is likely to happen if the Guaranteed Emergency Credit Line (GECL) loan tenure is not extended resulting is higher EMIS and negative cash flows,” said Angadh Arora, CEO, Centre Point Hospitality by mentioning that simplified subsidy structures for encouraging new hospitality projects all over the nation is much required at this point in time.

The industry is also demanding special incentives and guided marketing support to bring in inbound tourism in India specially post-pandemic.

“Multiple operating hour restrictions, capacity restrictions, and a lack of government support for restaurant industry, which employs more than 10 percent of the "young" working class in the country. Specifically, the enhancement of ECLGS, the ABRY relief, and the reinstatement of the input tax credit on GST will provide the impetus for revitalization; it would be incredibly advantageous if restaurants could once again utilize the GST input tax credit,” added Karan Pardal, Managing Partner of Drifters Cafe & Bar.

Not just restaurants, food delivery business and cloud kitchen brands have also set their expectations high from this budget as they have contributed a lot in building a digital first approach nation.

Commenting on the same, Sasha Wadhwa, Cloud Kitchen owner of Couche Patisserie mentioned, “Cloud kitchen companies are hoping for some respite until a certain amount of revenue is recorded. Any cloud kitchen operation requires the purchase of machines and appliances, which can be subject to machinery endowment schemes under manufacturing assistance from the government, which is not reflected yet. There also needs to be a defined definition of qualification and definition of a cloud kitchen, which is currently defined under e-commerce food business operators, allowing even last mile delivery operators to operate as cloud kitchens, which is not the case.”

Adding to the same, Roshan Nichani Managing Director of BJN Cloud Kitchens shared, “As a cloud kitchen owner, we would expect some tax relief until a certain revenue hits the sheets so that as business owners, we can show growth reflecting on the performance of the overall industry.”

And, there’s no denying that the hospitality sector was one of the worst and last recovering sectors post-pandemic. It faced many lows in the last two years. Tourists are starting to travel again, but this sector will need more time and support from the government.