"The Restaurant Industry" - OOPS!!! Technically you can't use that term

Posted by fshsfhsfh on Tuesday, January 24, 2012

I recently learnt that you cannot technically use the term "Restaurant Industry" - the government of India does not recognize the Restaurant business as a separate industry - it is currently clubbed with the "Hotel" industry. Are there any implications because of this or is it just a semantic issue?

There are several implications to not being recognized as a "Industry".

1) All government policies, subsidies are framed and designed to meet the needs of the industry - by getting clubbed with the "Hotels" business, all the rules and regulations governing restaurants are pretty much the same as the ones that govern hotels. Given that the nature of the hotel and the restaurant businesses are quite different, the current government rules and regulations are more appropriate for hotels than for restaurants.
2) The organized Hotel industry is larger & involves higher investments. So if the Restaurant industry is clubbed with the Hotel industry, chances are - the hotel industry folks will dominate the proceedings and any discussions related to the industry. Any engagement/discussions with the government on policies, tax benefits, subsidies for the Restaurant industry currently need to be routed through the folks responsible for the "Hotels" industry. Invariably, the voice of the Restaurant industry folks will not be heard. e.g. In Tamilnadu, a Restaurant cannot serve liqour currently. You need to be a hotel with a minimum number of rooms to be able to get a liquor permit.
3) The Restaurant industry has historically and still is largely unorganized. So issues around compliance etc. are not enforced as strictly as in the case of hotels. If the "Restaurant Industry" receives a separate status, it may be easier for the government to enforce compliance (this may be resisted by the large unorganized segment of the Restaurant industry).
4) Getting access to financing options becomes difficult for Restaurant business as the metrics used by the financial organizations are similar to that for hotels. If the Restaurant business gets "Industry" status, banks & financial institutions will create a set of assessment metrics more suitable for the industry. This will enable more folks to gain access to financing and avail special industry schemes.

The NRAI (National Restaurant Association of India) is working on trying to get "Industry" status. Hope they are successful in this endeavour in the next few years.

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