NRAI’s Reaction to the Union Budget: A Mixed Bag for the Restaurant Sector

The NRAI supports the government's income tax reduction, anticipating ₹1 lakh crore savings for citizens, boosting restaurant footfall and job creation in the sector.

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New Delhi, 03 February 2025 – The National Restaurant Association of India (NRAI) supports the government's initiative to reduce income tax, resulting in an estimated savings of ₹1 lakh crore for citizens. This move is expected to significantly increase discretionary spending, thereby benefiting the restaurant industry.

The NRAI also commends the government's focus on tourism and its grant of infrastructure status to hotels. However, the restaurant sector, which is an important part of the hospitality industry, has once again been overlooked. NRAI expresses disappointment that the restaurant industry was not classified as a labour-intensive industry, despite being the second-largest employer in the services sector, directly employing nearly 9 million people.

 “Restaurant footfall had been declining over the last year. Now there will be more money in people's hands. The new tax breaks for consumers in the country will encourage the middle class to eat out more. Businesses will become more profitable as foot traffic in malls and restaurants increases, spurring additional job creation. On the other hand, we are disappointed that the GST Council has not yet responded to our request for input credit. This remains the single most significant obstacle to our sector's growth" 

Sagar Daryani, President of NRAI

He additionally highlighted “the high mortality rate of Indian restaurants, with more than half closing within the first 24 months, owing to high operational costs and a lack of GST input credit. We hope that the GST Council will prioritize our input credit demand in the future. This much-needed reform would go a long way toward improving sustainability and lowering restaurant closure rates," Daryani concluded.

 "We hope to see a significant portion of this additional benefit flow into industries like ours. Our projected growth rate of 8.3% could potentially increase to 10-12% with this boost. The restaurant industry's contribution to job creation and economic activity, highlighting how increased disposable income might accelerate post-pandemic recovery. However, the sector remains disappointed, as its long-standing request for industry status was once again ignored. Recognizing the restaurant industry as labour-intensive would have significantly boosted employment opportunities."

Pranav Rungta, Vice President NRAI

Overall, the NRAI sees this as a mixed bag budget for the restaurant sector. The restaurant industry has made a significant contribution to India's economic growth, employment, and entrepreneurship. On behalf of the fraternity, we urge the Hon'ble Finance Minister and the Government of India to prioritize recognizing the industry's challenges and implementing necessary policy measures to ensure long-term sustainability.

About NRAI:

National Restaurant Association of India is the voice of the Indian Restaurant Industry. Founded in 1982, by L.C. Nirula of Nirula’s, Madan Lamba of Volga, O.P. Bahl of Khyber Restaurant, R.D. Gora of Gazebo, A.S. Kamat of Kamat Restaurants & other leading restaurateurs, it represents the interests of 500000+

Restaurants, an industry valued at INR 5.69 lakh crores. Being the leading association of the Indian Restaurant Industry, NRAI aspires to promote and strengthen the Indian Food Service Sector.

The Association in its 42nd year has a pan India presence and is governed by a committee of members and led by a President and Office Bearers. The committee consists of over 30 Restaurant CEOs / Owners representing various national and international brands from the F&B sector. The association works closely with a network of State and City Chapters across the country.

Website: https://nrai.org/