NRAI Calls for Union Budget Support: GST Reforms, SEIS Reinstatement, and a Dedicated Ministry for Food Services

 

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21.07.2024

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NRAI Calls for Union Budget Support: GST Reforms, SEIS Reinstatement, and a Dedicated Ministry for Food Services

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NRAI Calls for Union Budget Support: GST Reforms, SEIS Reinstatement, and a Dedicated Ministry for Food Services.

The National Restaurant Association of India (NRAI) has submitted a formal request to the Union finance minister, seeking targeted support for the restaurant sector in the upcoming Union Budget. Recognizing the significant contributions of the restaurant industry to the economy, the NRAI has outlined several key recommendations aimed at fostering growth and sustainability within the sector.

 

Key Requests by NRAI

GST Input Tax Credit (ITC)

The NRAI has called for the restoration of the GST Input Tax Credit (ITC) for restaurants, which was previously available but later withdrawn. Along with this, the association recommends an increase in the GST rate for restaurants to 12% from the current 5%.

 "Restoring the GST ITC will allow restaurants to reclaim the tax paid on input goods and services, thereby reducing their overall tax burden and improving cash flow. Increasing the GST rate to 12% will ensure revenue neutrality while providing much-needed relief to the sector", states the NRAI.

 Service Export from India Scheme (SEIS)

Another significant proposal from the NRAI is the reinstatement of the Service Export from India Scheme (SEIS). The association suggests a duty credit of 10% of the foreign exchange earned by restaurant entities.

 "The SEIS was instrumental in promoting the export of services and incentivizing restaurants to attract foreign clientele. Reinstating this scheme with a 10% duty credit will enhance the sector’s competitiveness and encourage more forex earnings", the NRAI notes.

 Creation of a Separate Ministry for Food Services

Highlighting the unique challenges and opportunities within the restaurant sector, the NRAI advocates for the establishment of a dedicated ministry or department for food services.

 "A separate ministry would focus on the specific needs of the food services industry, enabling more effective policy support, streamlined regulations, and industry-specific initiatives. This dedicated approach is essential for the sector’s growth and sustainability", says the NRAI.

 Importance of NRAI's Requests

The restaurant industry in India is a vital component of the economy, contributing significantly to GDP and providing employment to millions. However, the sector has faced numerous challenges, especially in the wake of the COVID-19 pandemic. The NRAI’s recommendations aim to address these challenges and ensure a robust recovery and growth trajectory.

Economic Contribution

The restaurant sector is a major contributor to India’s GDP and foreign exchange earnings. Supporting this industry through favorable policies and incentives will have a positive ripple effect on the broader economy.

Employment Generation

Restaurants are significant employers, providing jobs to millions across various skill levels. Enhanced support for the sector will help sustain and create more employment opportunities.

Consumer Impact

For consumers, a thriving restaurant industry means more dining options, better service quality, and competitive pricing. The proposed reforms are likely to enhance the overall dining experience for customers.

Conclusion

The NRAI’s comprehensive request to the Union finance minister highlights the urgent need for targeted support to the restaurant sector in the upcoming Union Budget. By addressing key issues such as GST reforms, SEIS reinstatement, and the creation of a dedicated ministry for food services, the government can ensure the sustainable growth and long-term success of this critical industry. As the Union Budget approaches, stakeholders in the restaurant sector are hopeful that their voices will be heard, paving the way for a more vibrant and resilient industry.