'Regulatory Environment Hurting Restaurant Business in India'

By Sourish Bhattacharyya IN A hard-hitting opening to the Indian Restaurant Congress on Tuesday, August 25, National Restaurant Association of India (NRAI) President Riyaaz Amlani (see photo) identified regulatory restrictions imposed by government, mainly municipal, agencies were the single largest irritant for the Rs 2,47,000-crore restaurant business, which employs the equivalent of the population of Switzerland (4.8 million people) and whose organised one-third contributes Rs 11,500 crore as taxes to state agencies. Amlani, who’s also the Founder-CEO and Managing Director of Impresario Entertainment and Hospitality Pvt. Ltd., likened this regulatory environment to ’the 500-pound gorilla in the room’, impeding the restaurant business more than rising input costs, growing employee attrition and other speed-breakers that come with the territory. ’If the regulatory environment changes, it will have an impact on your bottomline,’ he said at the inaugural session of the annual event organised by Franchise India, adding a dose of dark hilarity to the proceedings by mentioning the innovative heads, such as ’floral expenses’, under which under-the-table payments made to government inspectors have to be accounted for. The restaurant business in the country is ahead of the telecoms sector in size and value, and seven times larger than the hotels sector. Raising the perennially vexatious matter of the 30-odd licences and NOCs that each new restaurant anywhere in the country has to apply for and then keep renewing each year, Amlani said, ’I can retail clothes without a police licence, but I need one to sell food and drinks.’ The problem gets more complicated because of hyper local issues that restaurants have to deal with. The many laws governing the sector, moreover, varies from one state to the other. In Hyderabad, an excise licence costs a whopping Rs 35 lakh, but in Goa it comes for Rs 10,000 a year. Likewise, in most Indian states, the legal drinking age is either 18 or 21, but in Delhi, Punjab and Chandigarh, it is 25. The law in force in Mumbai requires a person consuming alcohol to carry a liquor licence issued by the Excise Department, where you have to admit you are an alcoholic. In New Delhi, the civic body, NDMC, doesn’t approve of alcohol being served in open space because the law doesn’t expressly permit it, although the excise department has no issues with it. ’Government agencies are allowing an archaic law override a huge revenue-generating opportunity,’ Amlani said in a telephone call after the event. If the government agencies clear up the regulatory mess, Amlani estimated the earnings from restaurants of state exchequers across the country will go up from the present level of Rs 11,500 crore to Rs 27,000 crore. ’The present system of licences has to be replaced by a registration system requiring restaurants to update their licences every three or five years, and not every year,’ he said. ’And of course, a single-window clearance system must be in place at once.’ Amlani’s other demands were to keep the Food Safety and Standards Authority of India (FSSAI) out of the restaurant sector’s hair (’it is redundant,’ he said); to end the system of getting an annually renewable licence from the weights and metrology department (’we use weighing scales only when we receive items,’ he reasoned); and to call off the unnecessary Ministry of Tourism verification. ’Restaurants give cities a personality,’ Amlani said, citing how Noma’s rise to international fame had led to a 20 per cent increase in tourist arrivals in Copenhagen. Is anybody listening? Inaugurating the Congress, Ritu Marya, Editor-in-Chief, Franchise India, pointed to the irony of India being the second most populous country and yet the 20th marketplace for food in the world. Is the regulatory environment responsible for this anomaly? Listening to Amlani, it seemed as if that was indeed the case. The author is Consulting Editor at BW Hotelier.-