With the imminent extension of lockdown across the country, the problems for the restaurant sector are expected to worsen further and spectre of failed businesses and higher unemployment is getting worse and bigger, restaurant industry body NRAI said on Monday.
The sector is staring at a complete decimation and "we, therefore, seek a few urgent interventions from you to keep ourselves afloat," the National Restaurant Association of India (NRAI) said in a letter to Niti Aayog CEO Amitabh Kant.
As employers to over seven million people, NRAI's first priority is to ensure that the employees do not face any major financial issues during the lockdown period and also in its immediate aftermath, it added.
"If we fail to achieve this, we fear that it may end up giving birth to larger social problems. Having said that, despite our honest intents, we and our businesses don't have the resources to pay them salaries even for the month of April. Paying them indefinitely is out of question," the letter said.
Hence, the government should intervene and support in this matter, it added. NRAI recommended immediate measures such as 'unemployment pay cover' for every employee, or at least those covered under the Employees State Insurance Act, with immediate effect and till lockdown is lifted.
"We reckon that our business will take anywhere between 6 and 12 months to gain any respectable traction in the post-COVID era. We, therefore, request you to extend the support to the extent of 50 per cent salary for these employees for the entire financial year ending March 2021," the letter to Kant said.
The government can also extend the help to marginal employees by supplying them extra quantities of grains, pulses, oils and other essentials using the PDS network. This can be free or on further subsidised rates during the lockdown period, it added.
NRAI also recommended that the benefit of provident fund (PF) contribution scheme should be extended wherein the state bears the PF contribution of both employees and the employers, to companies employing up to 1,000 persons.
It also asked for extending the PF withdrawal limit up to six months' salary as against three months now and an option to extend the moratorium on EMIs for all personal products such as home loans, vehicle loans, and personal loans by three more months, without any additional interest.
Regarding the operating costs, NRAI said the current closure on account of lockdown and anticipated slow pick-up after that may render several companies bankrupt and force them to shut shop. To avoid this, it proposed complete waiver of all renewal fees for licences, registrations and permits to operate banquets, restaurants, quick service restaurants, pubs and bars.
"Easy availability of working capital, without major collaterals and at low interest rates is also an absolute necessity step required to enable us to remain afloat," the letter said.
It also proposed deferment of all statutory dues by at least six months and concessions on utilities payments.
"We seek a complete direct tax holiday for a year to cope up with the losses incurred by us during the time India was shut down to counter the menace of novel coronavirus," the letter said.
To sustain the long-term growth of the sector, NRAI said policy directives, such as restoration of input tax credit (ITC) on GST and a fair e-commerce policy which prevents private equity (PE)-funded aggregators from misusing their dominant position in the market and hurt the smaller businesses are needed immediately.
"We need to encourage domestic investment into MSMEs (micro, small and medium enterprises) and start-ups. Domestic investors should be given exit preference in the form of capital gain taxation to spur risk capital," it added.
"It is a matter of our survival; and we surely cannot survive without your active and immediate support," the letter by NRAI President Anurag Katriar said.
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