Budget 2023-24 Expectation: F&B sector hopes FM announces policies, regulations to boost industry
Simplified GST norms urged to aid in the sustenance and development of the Food and Beverages industry
Sanjay Vazirani Last Updated:January 31, 2023 20:20:29 IST
Representational image. AFP
The Food and Beverages (F&B) sector is a big contributor to the economic growth of our country and must be considered a priority in the Budget 2023-24. The pandemic has dealt a severe blow to the sector and the government’s support is crucial to restoring normalcy at a faster pace to unleash the full potential of the sector.
Skill development issues plague sector
The two biggest challenges for the sector in the last year have been recovering from the aftermath of COVID and battling rising inflation and food prices. The Budget must prioritize growth-oriented measures to stimulate demand and consumption by outlining supportive policies, simplified regulations, skill development initiatives, and simple Goods and Services Tax (GST) norms to aid in the sustenance and development of the industry. Some measures that can help are as follows:
Govt must help restore demand, consumption
The F&B industry recovered in 2022, virtually returning to pre-COVID levels. The unexpected wave of worry and uncertainty again, though, might sap the sector’s morale. To stop any slump, there needs to be coordinated policy action. Despite being a major contributor to the economy, the industry is being plagued by rising inflation, and input costs have increased significantly as a result. Key initiatives in the next Union Budget 2023 regarding restoring demand and consumption would be critical in this situation.
The provision of higher depreciation on new investments in capital goods and permitting depreciation charges over an accelerated time frame will be helpful.
Raise purchasing power of people
Despite the potential for a worldwide economic downturn, Indian consumer demand has so far remained strong. The MSME sectors significantly contribute, and as a result. We hope that the Union Budget 2023 takes steps to support this sector while also raising or maintaining the purchasing power of the people it benefits so that the industry grows even in the face of potential challenges.
The input tax credit on GST for the sector has to be reviewed in the budget. Experiences over food bind people it is something that residents and travelling visitors constantly engage with expect quality options. International travellers favour trying the local cuisines. Thus, the food and beverage industry plays a fundamental role in bolstering the tourism industry. It is the only sector that does not benefit from Input Tax Credit. The sector’s growth can be accelerated by allowing input tax. Additionally, providing a provision for receiving a tax return on taxes paid on beverage vending machines (18) used in corporations (B2B), where the output tax is only 5%, will prevent the MSME sector enterprises from conducting their typical operation. In light of the impending budget release, we are hopeful this time it will be considered.
Strong and fair e-commerce strategy needed
The sector wants a strong and fair e-commerce strategy because it has become an essential component of the nation’s inclusive economic growth. The vast category of food and beverage includes restaurants, fast food chains, takeaways, retail food stores, hotels, bars, casinos, taverns, and many more such formats. We thus rely on the government to present a comprehensive budget that is consistent with the contributions made by the food and beverage sector to the country. There must be policies to further strengthen the overall digital ecosystem.
The reintroduction of “EPCG for Retail Sector”, to create modern infrastructure in the retail sector will be greatly appreciated. We hope that the concessional duty benefits under the EPCG scheme are extended for the import of capital goods and raw materials required by retailers. Some relief in tariffs and import duties on imported goods and raw materials will also be a welcome move.
Provide industry status to catering
Its time catering is given an Industry status. Catering services have been an important sector in countries like the United States. Innovations in business models and services have helped catering businesses not only stay afloat but also prosper amid an industry-wide revamp. They nourish and flourish, setting themselves apart by offering not only good food but also bespoke experiences, with attention to detail and personalization in menus, cutlery choices, tablescapes, and linens.
Allow players to carry forward losses
In view of the monumental losses that occurred to the hospitality industry, it is requested that establishments be allowed to carry forward losses of business for up to 12 years instead of the presently allowed 8 financial years. The Indian hospitality sector has shown steady growth over the last couple of years and exhibits the potential to expand further soon. It will be interesting to note that on World Economic Forum’s Travel and Tourism Development Index 2021, India continued to fare better than others in South Asia.
Tax concessions and reduced tax rates, simplification of regulatory processes and introduction of a special relief fund for the F&B industry to disburse in case of any calamity like COVID-19 in future are some other initiatives which can support the industry.
The writer is CEO, Foodlink-a luxury catering company. He tweets @Sanjayvazirani9 @IndiaFoodlink. Views expressed are personal.
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