The food and beverage (F&B) industry in India is significant to India’s economy, contributing 3% to its GDP and providing livelihood to over 7.3 million people. This industry is expected to grow at 14.2 % (CAGR 2020-2024) and will continue to be the largest employing industry in the country with 9 Million people across existing and emerging regions.
as the sector has been severely impacted by the COVID-19 pandemic, The F&B sector is eagerly awaiting the Union Budget 2023 as the year which serves as a foundation for stupendous growth in the coming years. The industry is hoping for measures that can help revive the sector and provide relief to businesses that have been struggling to stay afloat.
Measures that can help the industry recover and rejoice:
- The sector is hoping for relaxation in Section 115JB – Minimum Alternate Tax (MAT) with a waiver for two years from April 2023 to March 2025. This will help to reduce the tax burden on businesses operating in the F&B industry.
- A reintroduction to the Input Tax Credit on GST is also helpful and expected for the industry. Currently, F&B is the only industry without any provision for Input Tax Credit.
- The industry is yet to receive a covid relief package and has faced challenges due to high inflation and shortage of products, and reducing taxes for a period can provide much-needed support for these Food SMEs to bloom.
- The industry also wishes to see measures that will aid the development of small and medium-sized enterprises (SMEs). SMEs play a crucial role in the food industry, and the budget could help support their growth by providing access to financing and other forms of support. This would help these businesses become more stable and increase their competitiveness in the market.
- Another key expectation is the extension of investment-linked benefits under Section 35 AD for brownfield hospitality projects to the ongoing capital expenditures (CAPEX) of hotels and resorts. This will provide a significant boost to high-quality brownfield CAPEX and capacity expansion, driving investment and employment within the sector.
- The budget is also expected to modify the Leave Travel Allowance (LTA) rules, making it possible to include the amount spent on hotel stays as an LTA expense. Additionally, payments made by foreigners in rupees at hotels should be considered as foreign exchange earned for the Export Promotion Capital Goods (EPCG) scheme.
- The 2023 Union Budget could also consider tax breaks and incentives for businesses in the F&B industry, such as reducing corporate tax rates, offering subsidies for modernising equipment, and easing compliance requirements. These measures would help small businesses to invest in growth and create new job opportunities.
- Another important aspect that the F&B industry is hoping to see in the Budget 2023 is a reduction in food inflation. The government could address this issue by providing support for the agricultural sector and taking steps to improve the supply chain of food products.
- The F&B industry also hopes to see an improvement in the regulatory environment, with a simplified and streamlined process for obtaining licenses and permits. This would not only make it easier for businesses to operate, but also encourage more entrepreneurs to enter the sector.
Overall, the F&B industry is hopeful that the 2023 Union Budget and the Indian Government will take steps to support and promote the important sector of the economy. As a result, it helps create more jobs, increases economic growth, and boosts the overall competitiveness of the country.