Wednesday, Nov 29, 2023

Budget 2022 Fails to Lift Spirits of Pandemic-Stressed Hospitality and F&B Companies

Budget 2022 Fails to Lift Spirits of Pandemic-Stressed Hospitality and F&B Companies

People in the industry say ECLGS announcement not enough, direct intervention to relieve stress would have been more welcome

The pandemic has affected the food and beverages, and hospitality industries in a big way
The pandemic has affected the food and beverages, and hospitality industries in a big way Shutterstock

Hospitality, and food and beverage (F&B) industries, which have continued to experience severe hits to their business over the past two years, owing to the COVID-19 pandemic containment measures, were looking forward to directions and reliefs from the 2022-23 Union budget presented by Finance Minister Nirmala Sitharaman on February 1. However, the budgetary provisions (or the lack of it) drew disappointing or mixed reviews from the concerned industry players.

Although the finance minister acknowledged in her budget speech that the hospitality and related services, especially micro and small enterprises, were yet to regain their pre-pandemic level of business, industry spokespersons said that there could have been more direct intervention to support the highly stressed tourism, travel and hospitality companies and their employees. Related companies appreciated the Emergency Credit Line Guarantee Scheme (ECLGS) announcement but said they are waiting to see what lies ahead.

We spoke to some of people in the industry to understand the reaction of the concerned industries. Here are a few brief reactions.

Nakul Anand

Chairman, FAITH (Federation of Associations in Indian Tourism & Hospitality) 

The whole tourism, travel and hospitality industry is feeling quite dejected. The union budget provides some relief and medium- to long-term infrastructure measures to the stressed tourism, travel and hospitality industry, but there was an immediate opportunity for more direct intervention to support the highly stressed tourism travel and hospitality companies and their employees. This could have come in the form of wage support for employees of tourism, travel and hospitality companies till tourism revival happens, abolishment of TCS on outbound travel, infrastructure status to hotels, E-visa fees-waiver for all tourist visas till inbound revival happens, domestic income tax travel credit for Indian citizens and Indian companies, export status for tourism export earnings, global bidding fund for Indian MICE companies and setup of GST review committee to re-examine the tourism, travel & hospitality GST pain-points.

Sanjay Sethi 

Chief Executive Officer and Managing Director, Chalet Hotels Limited

We welcome the attention given to the hospitality industry by the finance minister in the Emergency Credit Line Guarantee Scheme (ECLGS) announcement. However, we await the fine print on the relaxations on meeting debt-ratio covenants of previous ECLGS schemes, if any, and if the ₹200-crore cap under the scheme has been enhanced.

We are also very pleased to hear the finance minister focus on the environment, sustainability, solar power and electric vehicles. The focus given to prioritise clean mobility and green energy in the current budget, is aligned with the initiatives and actions undertaken at Chalet Hotels Limited.

Miten Shah 

Co-Founder, The Studs Sports Bar & Grill

We were expecting Budget 2022 to provide the hospitality sector with special benefits towards restaurants. The least that could have been accommodated was to allow input credit for GST. Especially with the GST collection of the government in good shape, a move in this direction would have been very comforting news. This year’s budget could be challenging for the hospitality sector, since all the government could do is burden the industry with more credit lines by extending the Emergency Credit Line Guarantee Scheme (ECLGS) which hardly benefits restaurateurs who do not have existing loans and burdens. So, the industry will surely not be celebrating this year’s budget.

Rachel Goenka

CEO & Founder, The Chocolate Spoon Company

The budget presented by the finance minister for FY 22-23 was expected to bring about significant relief for the hospitality industry across avenues. The industry as a whole was eagerly waiting for reforms from the restoration of Input Tax Credit (ITC) on GST, relief on all statutory dues, unemployment assistance to extended operating hours for the industry. However, once again we were mentioned only briefly where an Emergency Credit Line Guarantee Scheme (ECLGS) of ₹5 crores along with ₹50,000 crore to be used to deal with the liquidity crisis was announced. It was very disappointing to see that no specific announcements were made for the restaurant Industry and we are yet again left to fend for ourselves.

Vineet Verma

Executive Director & CEO, Brigade Hospitality 

Hospitality and tourism sectors have, most regrettably, been given the short shrift in the Union Budget 2022-23. Except for the extension of ECLGS till March 2023, there is no other announcement that could have provided the much-needed succour for sectors that have been the worst hit.

Abhishek Kajaria 

Owner, Hammer and Octa

It was a disappointment for the F&B sector, with just an extension of ECLGS scheme given till March 2023, and no other benefits given to our bleeding industry. It would have been nice if input credit could have been given to the restaurants by the government.

Shreevardhan Asopa 

Co-Owner, LMNO_Q

In terms of the F&B industry, there is a little relaxation where few consumable items have become cheaper, making them even more accessible. The restaurant industry, which includes food services, restaurants and cafes, has been the worst-hit by consecutive waves of the pandemic. We have seen restrictions being imposed on these businesses and we hardly received any amount of relaxation or help. It felt very disappointing to see that no specific announcements were made for our industry. We are, yet again, left to fend for ourselves.

Sandeep Sehgal

Owner of Broadway Hotel and Flavours Of India

The F&B industry has already been reeling under the effects of the lockdown since 2020. With the extension of the ECLGS scheme, it hasn’t been much of an aid to the industry. We hope that the government will take measures to revive this sector as soon as possible.

Shaival Desai

VP, Growth, Petpooja 

Emergency Credit Line Guarantee Scheme (ECLGS) has provided much-needed additional credit to more than 130 lakh MSMEs. This should help them mitigate the adverse impact of the pandemic. The expansion of the ECLGS by Rs 50,000 crores, with the additional amount earmarked exclusively for the hospitality sector and related enterprises, should provide the hospitality industry with a much-needed safety net.

Saloni Jhunjhunwalla 

Business Partner, The Salt House 

We are hopeful with the budget announcement, as the hospitality and F&B sectors are ready to bounce back in 2022 after a dreadful two years marred by the virus.

Deval Tibrewalla

CEO & DIRECTOR, Hotel Polo Towers Group

The budget is a forward-looking budget, although we had hoped for relief on GST and infrastructure status for the industry. More clarity on the Emergency Credit Line Guarantee Scheme (ECLGS) extension will help the industry understand the benefit better.

Sonali Lakhotia 

Owner-Founder, Potboiler Coffee House 

The F&B industry did not receive any capital injection or tax help. The F&B industry had to follow all mandates, go through lockdowns, have no GST inputs at all in procurement, never received any help or was even mentioned in the budget. A major section of the Micro, Small & Medium Enterprises (MSMEs) and the sole provider of joy and good food amidst the harsh lockdown and stay-at-home rules, the F&B industry has been suffering through the lockdown. With the food-delivery giants and their high commission and over-the-top competitions, and the overheads rising continuously, the F&B industry has been under a lot of pressure. A lot of the small chains of cafes and restaurants have closed through the lockdown. Yet, no impetus or relief was provided in the FY 2022-23 budget.

Amit Goyal 

Franchise Partner, Farzi Café (Kolkata)

If you see the F&B industry, the number of people employed, and indirectly, the many support sectors on the backend part involved, we are talking about huge numbers. But this industry is yet to be recognised the way other sectors are.

Input credit of GST is definitely an area of concern which needs to be addressed, and a single window model must be created for entrepreneurs who wish to open a restaurant .

Harsh Sonthalia 

Co-Owner, Jalsa and Please Don’t Talk

The hospitality industry has been bearing the brunt of the pandemic for quite some time now. We have been hoping that incentives in the form of liquidity and restoration of the input tax regime would have happened. Unfortunately, none of that was announced.

Abhinav Kumar

Founder & CEO, Kaldi Craft Coffee Pvt Ltd

The F&B industry has gone through a lot of economic turmoil in the past couple of years. As a budding speciality coffee brand, we were eagerly looking forward to the directions and relief from the Union Budget 2022-23. Appreciate the attention given to the industry in Emergency Credit Line Guarantee Scheme announcement. The actual test lies in the fine print and execution of the same, thereby assisting the hospitality fraternity in their path to progress and sustainable expansion. Was eagerly awaiting reforms to allow input credit for GST. I sincerely hope the government will take cognisance and measures to revive this sector, since their focus is on environment and sustainability, which form the core for farm-to-cup brands like ours.