Riyaz Amlani, president of the National Reataurant Association India, speaks about the changes that the organisation has been trying to bring in the food and beverage culture of the city and how excise duty and the budget are affecting business.
Removal of inspector raj in excise renewals
last year, the Delhi government enforced a new excise policy aimed at ending ‘inspector raj’, paving the way for the establishment of microbreweries in hotels and restaurants in the Capital. With the new policy in place, the government has also decided to do away with the present renewal system of excise licenses for hotels, clubs and restaurants. The licenses will remain valid merely on payment of prescribed annual fee. The government also tried to make the renewal process of licenses easy for the operators. The licensees can renew the licenses by paying the renewal fee without any additional documentation. In case of imported liquor, the excise duty shall be collected from the wholesale licensee at the point of import henceforth. This, the government believes, will discourage pilferage of excise duty. NRAI had raised their concerns about the “high initial fee” to the Excise Commissioner of Delhi. As per the fee structure, an entrepreneur has to furnish a solvency of Rs50 lakh, a security deposit of Rs20 lakh and a personal bond of Rs20 lakh to get the license to set up a micro-brewery in Delhi. The initial investment will be big constraint.
lowering of legal drinking age in Delhi
Currently the minimum legal drinking age in Delhi is excessively high at 25 years. In majority of the states, it is 21 years and also at 18 years. NRAI has been voicing this concern to bring it down to 21 years in Delhi. It is much safer that a young adult consumes alcohol in a regulated and licensed environment rather than procuring alcohol from unregulated sources. NRAI has already made representations to the government and concerned departments to make it 21 years for hard liquor and 18 years for beer/wine. A side-effect of this current drinking age is that a lot of excise revenue is being blocked. This policy will change that. Delhi has one of the highest drinking age limits in the country. Everywhere else, it’s mostly 18 or 21, so when you take into account that Delhi is one of the most progressive cities in India, this rule seems slightly regressive.
Extension of operating timings of restaurants
Based on current lifestyle trends and customer needs NRAI suggests that the operation/excise timings be increased from the present 1:00 am to 2:30am, only on weekends on trial basis for a period of three months. During these three months the law and order situation can be monitored, and if there is no noticeable escalation in the law and order situation, the extension on weekends could be considered to be more permanent. It is pertinent to mention that the food and beverage outlets within hotels already have a 24 hours operating permission, and liquor is allowed to be served till 3am on all days. This is widely resented amongst stand alone and smaller licensed establishments as being discriminatory.
It would also be important to point out that recently, the authorities in Bengaluru, on NRAI’s suggestions, granted a similar extension of one and a half hours to all licensed premises on weekends and after a probation period of three months since there was no reported increase in law and order situation, this extension on weekends was made permanent. This has directly resulted in four per cent increase in VAT and excise collections, and increased direct employment in restaurants by approximately 7,000 jobs. The revenue/employment figures for Delhi would be much higher.
Allowing restaurants to start serving in open areas
At present, municipal authorities are not permitting service in the open spaces and terraces available to restaurants within the premises. However, the excise department was issuing permission for the same (with additional fees), which has now also been put on hold. Such service in the open areas should be continued. Curtailing this, causes loss of business to the restaurateur, loss of VAT and excise revenue to the government and reduces the enjoyment of tourists, who are drawn to open air restaurants. Internationally, open air Alfresco cafes add considerably to the charm of the cities. There is no reason why Delhi should not enjoy such a privilege.
Impact of budget on restaurant industry in Delhi
The Union Budget 2016 was largely agrarian in nature and the restaurant and F&B sector was looking forward to some impetus. While we had also hoped for some announcement on implementation of GST, the industry will be impacted to a limited degree by the increase of service tax, through the introduction of 0.5 per cent agri cess. However, the decision to circulate the model shops and establishments bill to state governments for voluntary adoption is a welcome move and NRAI hopes to see some traction on it.
