Lack of quality infrastructure, inadequate skilled manpower hampering growth of F&B service industry
FICCI-Grant Thornton Report
While inaugurating the seminar on 'Unlocking the Potential of Growth in Food & Beverage Service Industry' organised by FICCI along with Grant Thornton on May 26, 2015 in New Delhi, Atul Chaturvedi, Joint Secretary, DIPP, mentioned that the government recognises the Food & Beverage (F&B) sector's great potential for growth and job creation. Hence, it has been identified as a priority sector in the National Manufacturing Policy and is also amongst the top 25 priority sectors, which are being promoted across the globe to attract investments. Speaking about the way forward, Chaturvedi cited that the government is now looking at identifying potential markets and then engaging with potential investors in specified and targeted interactions to convert prospective investments into real ventures.
Dr. Arbind Prasad, Director General, FICCI, said that the Indian F&B service industry is one of the most vibrant industries. Hence understanding the opportunities available in this sector, FICCI last year decided to create a subcommittee within the Retail division of FICCI. This subcommittee aspires to create a focused thought-leadership for this sector. FICCI will endeavour to voice the concerns of this niche sector to the right authorities.
Piyush Patodia, Chairman - FICCI Food Retail Services Taskforce & Executive Director, Grant Thornton India LLP, said, “Foreign brands need to ensure that although they see India as a large opportunity, there needs to be an appetite for risk taking. India is a difficult terrain to operate out of with multiple taxes, complex licensing and high operating costs. In addition, tastes and preferences vary significantly based on the location within India. With correct planning and customisations, companies can see explosive growth of their concept in India.”
Rahul Singh, Founder & CEO, The Beer Café; Zoravar Kalra, Founder & Managing Director, Massive Restaurants Pvt. Ltd.; Rahul Kumar, CEO, Maez One Group Pvt. Ltd and Chetan Arora, Development Agent, Subway, also addressed the audience.
The FICCI-Grant Thornton report 'Unlocking the potential for growth in Food & Beverage Service Industry' was released during the seminar. The report focuses on how to improve 'Ease of Doing Business' in this sector and make it more attractive for both Indian and foreign investors. The report identifies the challenges faced by the industry. Lack of quality infrastructure and shortage of adequate skilled manpower are the most critical issues hampering the growth of the F&B service industry in India. The other issues faced by the industry are high real estate costs, the large number of licenses required to operate in the sector and a plethora of taxes, the report highlighted.
The report recommends that the government's intervention in creating good infrastructure and developing skilled manpower would help boost the growth of the sector. It furthermore proposes that real estate costs can be reduced by lobbying with real estate developers to develop a better formula of rent sharing and developing innovative models for rent. Simplified licensing requirements with a singlewindow clearance approach and rationalisation of taxes levied on the restaurant industry are a few solutions proposed in the report to effectively tackle licensing and taxation issues, faced by the industry.
L to R: Shilpa Gupta, Head - Retail / FMCG / Gems&Jewellery, FICCI; Devendra Chawla, Group President – Food, FMCG, Brands, Future Group & Co-Chair, FICCI Food Retail Services Task-force; Dr. Arbind Prasad, Director General, FICCI; Atul Chaturvedi, Joint Secretary, DIPP and Piyush Patodia, Chairman - FICCI Food Retail Services Task-force & Executive Director, Grant Thornton India.