Multiple taxes pose growth barriers for food industry: NRAI.

NEW DELHI: Multiple levies such as VAT, excise and service tax are erecting barriers in the growth of India's food services industry, expected to reach $ 78 billion in five years, National Restaurant Association of India has said.

Besides, it said, food price inflation is a key factor affecting the country's food services market, which is also impacted by delayed monsoons, economic slowdown and unfavourable demand-supply conditions.

Grappling with these issues, the industry body has sought government help to address various issues facing the industry so as to catalyse its growth to optimum levels.

The industry is "burdened with multiple taxes like VAT, excise and service tax besides different state taxes which add up to 17.5 per cent - 25 per cent of the bill value. The high taxation is a serious impediment to market growth," NRAI has said in a report.

The food services industry is a major contributor to the exchequer in terms of tax revenues and "it is important that the role of the food services market is acknowledged by the government", it added.

The report said the market size of the industry (organised and unorganised) is expected to be $78 billion by 2018, from the current level of $48 billion.

The sector has a vast untapped potential with eating out becoming a regular form of entertainment for consumers today, it added.

The reason for this high growth includes changing consumption habits of consumers and emergence of new players in the sector, the industry body said.

The country's organised food services market (chain and licensed standalone outlets) is expected to grow by 16 per cent over the next five years and touch USD 28 billion.

"The organised food services market is slated to witness a double-digit growth of 16 per cent over the next five years, spurred by the changing consumption habits of consumers and the emergence of new players in the space," it added.


Source : economictimes.indiatimes.com