Budget 2023: As we move closer to the Union Budget 2023, various sectors of the Indian economy have high expectations from the government. The food and beverages industry, too, is looking forward to some changes in the sector. It’s hoping for reintroduction of an input tax credit. As inflation had led to a rise in the cost of products and raw materials, the government allowing input tax credit could prove to be a boon for the sector.
Pradeep Shetty, President, Hotel and Restaurant Association of Western India (HRAWI) is expecting the Union Budget to include relaxations in Section 115JB – Minimum Alternate Tax (MAT) waiver for two years from April 2023 to March 2025. He said, “The Budget should extend investment-linked benefits under Section 35 AD for brownfield hospitality projects to the ongoing CAPEX of hotels and resorts. This shall immensely benefit high-quality brownfield CAPEX and capacity expansion, accelerating investment and employment in the sector. The Budget should modify the Leave Travel Allowance (LTA) rules to include the amount spent on hotel stays to be considered as LTA expense and payments by foreigners in Rupees at hotels should be as foreign exchange earned for the purpose of EPCG scheme.”
This will help reduce the tax burden and provide marginal relief to the hospitality sector.
The Food and Beverage sector is crucial from a strategic standpoint because it contributes 3 per cent of India’s GDP. In India, the F&B industry provides a living to more than 7.3 million people. As a result, it is now the largest employer in the nation.
Rajan Sethi, The GT Road, Founder of Bright Hospitality Group told the financialexpress.com, “This budget should allow for interest-free loans, more subsidies, and a smaller tax structure in order to hasten the sector’s recovery. Additionally, an extended moratorium should be made available to F&B businesses since the majority of them fall under the Micro and SMB categories. Since a food and beverage business must obtain numerous licenses to establish itself in India, thus the upcoming budget is where we anticipate the government to address this.”
He added, “The budget needs to revisit the input tax credit on GST for the sector. People are constantly searching for food while they are on the road. They prefer to sample regional cuisines when traveling to new places. Food and drink are thus an integral part of the hospitality sector in India and other nations. The budget, therefore, is expected to accelerate the growth of the F&B industry and we have all the good reasons to have high hopes for it.”
Sharad K Upadhyay, GM, Crowne Plaza, Greater Noida said, “We are expecting the central government to consider giving industry status to hotels across the country, spending on investment in infrastructure development to support the effortless movement of people, tax relief measures to owners so they can pump in investments in current hotels as well as resume the stalled progress of hotels in the pipeline.”
When it comes to India, the nation is bursting with hues, cuisines, ethnicities, activities, and more. As a result, visitors from all over the world are drawn to the country and its F&B sector. “The F&B industry is eagerly looking forward to some prompt liquidity support, the reintroduction of Input Tax Credit on GST, and relief from excessive licensing and stringent regulations. Just to mention, F&B is the only industry that doesn’t receive Input Tax Credit (ITC) benefits. So, we are optimistic this time as the budget announcement comes near,” Ankush Arora, Founder of Uncle Jack’s said.
Additionally, he said, “The sector seeks a robust and equitable e-commerce policy as e-commerce has emerged as a critical arm for the inclusive economic growth of the country. Restaurants, fast food chains, takeaways, retail food stores, hotels, bars, casinos, pubs, and many other establishments fall under the broad category of food and beverage. So, we’re counting on the government to bring an all-embracing budget that goes well with the contributions of the F&B industry to the nation.”
Anshi Saxena, Co-Founder, Colocal further explained that it is relatively easier to be a part of the F&B business these days. However, there’s still a lot of ambiguity in terms of licenses. She said, “Further clarity in terms of getting licenses will make the job smoother and easier. As a matter of fact, the F&B and service sectors contribute around 6 to 7 per cent of GDP of India and 8-9 per cent in total employment, if one includes the unorganised sector, then the numbers are bigger. Yet we weren’t given any specific Covid relief package. At present, with the high inflation and shortage of products, Government can reduce the taxes on F&B companies for a couple of years. This will help us cope better with the ongoing struggles.”
Vikram Goel, MD, Unox India told, “India’s hospitality and F&B sector is an integral part of the country’s economy, which plays a key role in contributing to its overall growth. The Union Budget 2023 has the potential to transform the sector into a more vibrant and inclusive one. In the hospitality and F&B sectors, several expectations from the budget are likely to be of particular interest to the food industry. We look forward to the Budget to support the growth of small and medium-sized enterprises (SMEs) in the sector, which are a vital part of the food industry. This could include access to financing, and other forms of support to help these businesses grow and thrive.”
He added, “Another expectation is for initiatives to promote domestic tourism, which is a key contributor to the sector. This could include marketing campaigns, infrastructure improvements, and other initiatives that encourage people to travel and visit restaurants, cafes, and other food establishments. India’s food and beverage sector has experienced significant growth in recent years, driven by several factors. One major factor has been the increasing disposable incomes of consumers in India, which has led to a rise in demand for dining out and purchasing convenience foods. This has spurred growth in the restaurant & fast-food sectors and the packaged food industry.”
With the right measures, the Budget 2023 can help the hospitality and F&B sectors in India regain their pre-pandemic momentum and ensure that the sector continues to contribute to the growth of the economy.