When Finance Minister Nirmala Sitharaman stood up in the Lok Sabha on February 1 to deliver the last full Union Budget for this government every sector was hoping for some new scheme, incentive, or reform to ease the pressure created by the Covid-19 pandemic and uncertain geo-political environment.
One of these severe pandemic-battered industries is the food and beverage (F&B) sector. The F&B sector, which was expanding exponentially before the pandemic, suffered a huge blow due to lockdowns and restrictions that caused a large number of businesses to drastically scale back or shut down operations.
The industry says in Budget 2023, the announcement of revamped Credit Guarantee Scheme promises, PAN as the common business identifier, support to MSMEs, and a boost for tourism will have a positive effect on the F&B businesses.
Here is what the F&B industry has to say about Budget 2023.
Ankush Arora, Founder, Uncle Jack’s
The restaurant industry generally responds favorably to Budget announcements that provide financial relief in the form of grants, tax breaks, and loan programs. However, if the budget imposes increased costs, such as higher labour costs or taxes, the industry may react negatively. The restaurant industry will respond to a Budget in general based on how it affects the bottom line and ability to continue operations.
The food and beverage (F&B) industry's reaction to a budget announcement can vary depending on a number of factors, such as tax hikes, government subsidies, or any other specific measures. Any action that lowers these costs will undoubtedly help the operator to maintain his business at a time when the industry is experiencing numerous challenges post-Covid in terms of rising labour costs, soaring ingredient costs, and a labour shortage in addition to rising energy costs.
Sandeep Singh Katiyar, CEO and Director, The Finch
At a point when the industry is facing multiple challenges in this post-Covid world, increasing manpower costs, soaring ingredient costs and lack of labour alongside an increase in energy prices, any action which reduces these will definitely help operators keep their business afloat. Another challenge which the government should address is allow setting off GST input costs as that is a cost which is a direct hit on P&L, however, if the budget imposes increased costs, like higher labour costs or taxes, the industry may react negatively. The restaurant industry is scrambling to maintain a healthy bottom line and that innate skill to continue operations seamlessly while being able to meet their commitments. The F&B industry's reaction to a Budget announcement can vary depending on a number of factors, like tax hikes, government subsidies, or other specific measures.
Nishant Sinha, Founder, Roastery Coffee House
The Budget’s revamped Credit Guarantee Scheme promises to support MSMEs which is good news for F&B industry and new entrepreneurs in this sector. The F&B sector has a long way to recover from the losses suffered during Covid. The industry is truly in need of funds to function and expand. Therefore, there seems to be good hope with this scheme for existing members and new members who wish to open F&B business.
The Budget also mentioned PAN as the common business identifier. F&B business requires several licenses and the procedures can get cumbersome, especially because different states have different rules and ways. However, with this scheme, we are hoping that licenses can get less complicated to acquire.
The Budget also promises a huge boost for tourism which is good news for the hospitality sector as a whole. We hope better business, more exposure, and a chance to take our products beyond India. However, inflation still continues to rise and the problem of expensive raw materials will continue to be a struggle. It will be difficult to cope with rising prices and yet deliver pocket-friendly prices to consumers.
Sheetal Saxena, Founder, Colocal
The Union Budget 2023 has brought a sense of relief to the F&B sector, which has been struggling for the past year due to the pandemic. After suffering losses during Covid, the F&B industry still has a long way to go and the sector truly needs funds to operate and expand. The budget’s revamped Credit Guarantee Scheme promises to support MSMEs which is good news for the Food and Beverage industry and new entrepreneurs in this sector. This scheme seems to offer good hope for existing members and new members who wish to open their F&B businesses.
The introduction of PAN for licensing in the F&B sector is a welcome move as it will help to streamline the process of obtaining a licence and reduce the compliance burden on businesses. F&B requires a variety of licenses, and the process can get cumbersome, especially since different states have different regulations and procedures.
The Union Budget 2923 has provided a much-needed boost to the tourism and hospitality sectors. It has been seen as a sign of the government's commitment to the development of these sectors, which have been severely affected by the pandemic. We hope that this boost will lead to better business, more exposure, and the opportunity to take our products beyond the Indian market.
Overall, the Budget provides a strong foundation to drive growth and development in the tourism and hospitality sectors. Also, the F&B sector will now benefit from the government's focus on infrastructure and development, increased access to credit, and further policy reforms. This budget has provided a much-needed boost to the sector and will help it to regain its lost glory.
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