New Delhi: The National Restaurant Association of India (NRAI) has asked for significant reforms to the restaurant business.

In the run-up to the Union Budget, NRAI has advocated the resumption of Goods and Services Tax (GST) input tax credit in a letter to Finance Minister Nirmala Sitharaman. According to the association, this important shift will level the playing field for restaurants currently operating at a 5% GST rate without the benefits of input tax credit. To balance this, the group has proposed raising the GST rate to 12%, which it claims will simplify compliance and boost profitability, particularly for small businesses.

"While restaurants with less than a certain revenue threshold can continue to operate under the current GST provisions, the organized sector with higher revenues and capex outlay may opt for the proposed GST regime," said Kabir Suri, president of the association and co-founder and director of Azure Hospitality Pvt Ltd, which operates the popular Mamagoto restaurant chain.

The establishment of a dedicated food services ministry or department is another significant suggestion from the NRAI. According to the group, this measure is justified by the industry's significant contribution to the economy - around $4.23 trillion every year. According to the report, such a dedicated organization would consolidate the currently fragmented regulatory structure, easing compliance and boosting growth.

The NRAI has also made a number of additional demands. These include granting the sector "industry status" to allow it to access easier financing and subsidies, developing a balanced e-commerce policy to protect restaurants from unfair competition, and addressing operational challenges such as lowering GST on commercial rentals and simplifying licensing processes.

The group has lobbied for longer business hours, believing that it will speed India's path towards becoming a $5 trillion economy. It also advocated for targeted subsidy programmes and greater access to debt financing for small and medium-sized enterprises (SMEs), particularly in smaller towns and cities.

The NRAI also emphasized the importance of lowering the GST on eco-friendly packaging materials, urging for a transition away from higher-taxed products such as plastic. This action is consistent with the government's environmental goals and promotes industry sustainability.

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