How Union Budget 2017 can have an impact on the Restaurant Industry


The Union Budget 2017 was one of the most awaited budgets for all the sectors in India. After a turbulent year if highs and lows of demonetization, the Union Budget was presented on 1st February, 2017 in the Parliament. It has stirred a wave of expectations and anxiety across the country. The restaurant owners were expecting something good from Budget 2017. The budget sets the heart racing every year and makes or breaks many expectations.

So after the Finance Minister, Arun Jaitley has announced the budget, many expectations of the restaurateurs have come with a few challenges and many advantages. The new Budget 2017-18 has lots of incentives which can directly and indirectly benefit the food & beverage industry. As far as the food and restaurant industry goes, some big names have several pressing issues in the market and they hope that it will be fixed in this budget.

Riyaaz Amlani is the President of the National Restaurant Association of India and CEO of Impresario Entertainment and Hospitality. He thinks that the current tax regime is cumbersome for the Restaurant Industry. Mr. Amlani said that whether structured or unstructured, this industry generates the maximum employment. There is no incentive as such given to this industry. However, the tax levied is heavy enough for the regular person who ends up paying around 30% of tax of the total bill. He hopes that the Union Budget 2017 ushers in good measures for the industry. It is expected to get more clarity on the GST. The Budget has given 5% reduction tax slab to the middle class section who earns between Rs. 2.5 to 5 lakh bracket. It will help to increase the disposable income of the section.

The key features of Budget 2017:

  • The Consumer Price Index (CPI) based inflation has decreased in July 2016 from 6% to 3.4% in December, 2016. This can affect the buying behavior of the restaurateurs as they can buy good & raw materials at affordable rates. The uncertainty prices for commodity goods & services are subject to price fluctuations.


  • Road map for Digital economy is the key feature of the Union Budget. Now in the banking system, it has introduced surplus liquidity. It will reduce the borrowing costs and increase the access to credit. It will help to generate the new entrepreneurs to invest in its own restaurant or start-up business in the Food and Beverage industry.


  • The Union Budget will also improve the infrastructure and other facilities like electricity and roads in the rural areas . It will not only improve the supply chain management system for the restaurants but also help the SMEs restaurant owners to open many restaurant/ hotel chains. As a result, it will have increased spending capacity of the consumers which help the restaurateurs to grow its businesses.


A cut in Service Tax would surely have increased footfalls at the restaurants. Unfortunately, the Budget has not affected the taxes levied at restaurants. However, the new Budget 2017 has relaxed the restaurant business. The current re-monetization movement is slowly restoring business operations and sales in the Food and Beverage industry.