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NRAI Calls For Bailout For Food Service Sector Due To Coronavirus Impact

NRAI Calls For Bailout For Food Service Sector Due To Coronavirus Impact

The association said it needs measures to protect businesses from total bankruptcy

NRAI has requested relief on the total and immediate deferment of all statutory dues

NRAI is also seeking unemployment pay cover for employees

As India’s major cities go into lockdown, the National Restaurant Association of India (NRAI) has reached out to the finance ministry seeking a financial bailout package from the government for the food services sector.

The restaurant association said that it had advised its over 5 Lakh members to shut down their dine-in operations till March 31 to mitigate the health risks at restaurants amid coronavirus pandemic. NRAI said that the move was supported by restaurants despite coming with great financial losses. NRAI president Anurag Katriar said, “The restaurant industry with an annual turnover of approximately INR 4 Lakh Cr providing direct employment to over 7 Mn Indians is in a very precarious situation currently, fighting a grim battle for its basic survival.”

The organisation has written to finance minister Nirmala Sitharaman saying that the industry is staring at immeasurable losses, the prospect of several businesses closing down and most importantly, a scary spectre of job loss. Saying that this is a matter of survival for many in the service industry, the association also called for measures to protect businesses from total bankruptcy. Sitharaman will be leading the government’s economic task force for Covid-19 recovery.

NRAI requested relief on the total and immediate deferment of all statutory dues, whether GST, advance tax payments, provident fund, ESIC, customs duties at the central government level and state excise and the renewal of liquor licenses and value-added tax at the state level for a period of twelve months.

“This will leave the businesses with some cash flows to take care of more pressing expenditures like wages, payment to contractual labour and small marginal suppliers such as farmers of vegetables etc,” NRAI said.

“As an industry, we are anyways plagued with a very high proportion of fixed operating expenses which makes our business very high-risk upon revenue fluctuations, denial of ITC makes it even worse because it increases several of our key fixed expenses like rent on property, hiring of services etc, by a whopping 18%.”

Here’s what NRAI has asked for:

  • Restoration of input tax credit (ITC) on GST in the sector.
  • Unemployment pay cover for employees, especially the ones who are at the lower end of the spectrum, and are covered under ESIC scheme is requested to be facilitated by the Government through the corpus available with the ESIC or any other welfare scheme such as MNREGA.
  • Total and immediate deferment of all payments for utilities, such as electricity, water, gas etc, supplied either by state, state-run corporation, PSU or private entities
  • The moratorium of repayment of all types of loans and facilities for a period of twelve months
  • An immediate suspension on interest charged on term loan or working capital for a period of three months

Katriar added,“Now we are staring at almost zero revenue in the immediate term and at least drop 50% for months thereafter. We are therefore seeking support from everyone in the ecosystem in mitigating these fixed operating costs so that our losses are contained to manageable levels.”