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India's Food and Beverage Sector To Touch Rs 3.80 lakh crore by 2017'

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Indian food and beverage market, estimated to be over Rs 2 lakh crore, may nearly double to touch Rs 3.80 lakh crore by 2017, according to a FICCI-Grant Thornton report. 
 
The report titled "Unlocking the potential in the food and beverage services sector" highlighted the overall potential of the industry and identified key challenges. It also focussed on how to improve ‘ease of doing business’ in this sector and make it more attractive for both Indian and foreign investors.
 
Changing demographics, increase in income, urbanisation and growth in organised retail is driving India's food and beverage sector, the report said. Segments such as fine dining, casual dining, quick service restaurants, cafes and so on constitute more than 77 per cent of the overall market. It notes that restaurant brands and chains of both Indian and MNCs are still less penetrated and there exists a large opportunity to create bigger restaurant chains
 
A large number of foreign brands have entered India over the last 15 years like McDonald's, Pizza Hut, Dominos, Subway and KFC. These brands owners are now exploring how they can be part of the investments in India and reap a better profit.
 
According to Grant Thornton India Partner Vinamra Shastri: "The government has been of late focused on developing the food processing infrastructure through the promotion of cold chains and integrated food parks by subsidising the capital cost. This will ensure the right infrastructure availability to set up processing units to provide quality inputs to the restaurant sector and also provide a big boost to the availability of processed foods within the country. These initiatives will go a long way in promoting the ‘Make in India’ initiative.”
 
However, the pace of growth will be determined by the manner in which key issues - lack of quality infrastructure, shortage of skilled manpower, increasing real estate cost, large number of licenses required and the time to obtain them and Tax incidence – are addressed.
 
 “The time lost in obtaining the large number of requisite licenses especially liquor (it can take more than 40 days) are painful while opening a new restaurant” said Amit Arora, founder and  managing director,  Buddy Retail.
 
The Indian restaurant industry is burdened with multiple taxes like VAT, excise, and service tax, besides different state taxes, which add up to 17.5-25 per cent of the bill value.

Amit Jatia, vice chairman,  Hardcastle Restaurants said, “Our primary concerns are on multiple taxes, high food and commodity costs, shortage of skilled manpower and operating hours working hours for women employees and infrastructure development to help manage and better supply chain and cold storage systems, implementation of GST and multiple licensing among others. We look to the government to work closely with us on resolving these issues.”