GST Reforms: Restaurants, Retail May Be Direct Beneficiaries, But There's A Catch

Zorarwar Kalra, vice president of the National Restaurant Association of India, has explained of the reforms in goods and services tax would give a push to growth and domestic consumption.

"India is the only large economy in the world where 63% of our entire GDP is domestic consumption," he said during the NDTV Profit GST Conclave on Tuesday.

The Massive Restaurants Pvt. founder also pointed out that eating out is the "most-preferred form" of entertainment in India, "Indians love eating out more than any form of entertainment. The Indian food and beverage or F&B sector is 40 times larger than Bollywood... Indians spend almost 40% of their gross disposable income on eating out," he claimed.

Therefore, he added, that not only will the food industry be a direct beneficiary of added money in the hands of consumers but also due to some of the input costs. He underlined that the rate cuts in staple food ingredients like ghee, butter and so on.

However, Zorawar said that the lack of ITC for hotels and an 18% GST on occupancy were some barriers in the growth of the sector itself.

"Morbidity rate of the food business, the restaurant sector is the highest in the world. Nine out of 10 restaurants shut down within a month and 9.6 out of 10 shut down within 18 months," he stated, adding that while any kind of enhancement will find its way to the food business, "the full benefit may not be accruing to us".

Pushpa Bector, senior executive director at DLF Malls, also shed some light on how the apparel retail sector would reap benefits of the reforms, while also talking about certain setbacks the sector might face.

During the panel discussion, she stated that while there will be an overall sentiment boost, certain conditions should be re-evaluated.

"Couple of things are very good, and a few... dil maange more", she said. Bector also explained how apparels above Rs 2,500 would attract a levy of 18%. She added: "Rs 2500 for an apparel will make it value-centric, not aspirational."