The Indian restaurant sector plays a crucial role in the economy, driving job creation and national revenue. The National Restaurant Association of India (NRAI) anticipates that with the government granting ‘industry’ status and providing input tax credit on GST, the sector could create 1.5 crore jobs by 2028, up from the current 85 lakh.
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The restaurant sector is a vital contributor to the Indian economy, playing a significant role in job creation and national revenue. As the third-largest industry in the country, it generates substantial direct and indirect tax income while driving the growth of related sectors. This cascading impact fosters economic development at multiple levels, boosts tourism, and increases the value of local agricultural products.
India is set to emerge as the world’s third–largest food services market by 2028, overtaking Japan. In this scenario, the National Restaurant Association of India (NRAI) emphasizes the importance of implementing supportive policies to fully leverage the industry’s growth potential. The sector’s critical role in the economy is highlighted by its contribution of around 1.4% to the national GST revenue. The industry presently has a market size of ₹5.5 trillion, and a report by Swiggy and Bain & Company forecasts this to rise to ₹9 trillion by 2030.
The restaurant industry in India, which currently provides employment to approximately 85 lakh people, has the potential to boost this number to 1.5 crore by 2028 with the right support from the government. This outlook was recently shared by Mr. Zorawar Kalra, Vice President of the National Restaurant Association of India (NRAI), and Founder of Massive Restaurants Pvt. Ltd.
Addressing critical issues in restaurant industry
Mr Kalra pointed out that under the current GST framework, restaurants are taxed at 5% without ITC benefits. Alternatively, they could opt for the 18% GST bracket to claim ITC, but this higher tax rate discourages many establishments from choosing it. The lack of ITC creates significant cost pressures, which Kalra described as a “major issue” for the industry. The NRAI is actively engaging with government stakeholders in hopes of resolving this matter.
He emphasized the need for the sector to be granted formal ‘industry’ status and the reinstatement of input tax credit (ITC) under the Goods and Services Tax (GST) regime to facilitate such growth.
He stated, “We don’t have a separate industry status, that would be a big positive move, as it would give us a voice.”
Other major issue facing the industry is the ongoing legal battle regarding the mandatory levying of service charges. The Delhi High Court is scheduled to hear related pleas from restaurant associations, including the NRAI and the Federation of Hotel and Restaurant Associations of India, on May 9.
Need for dialogue between the industry and the aggregators
The NRAI, which represents over 5 lakh restaurants nationwide, is also engaged in disputes with food delivery aggregators like Swiggy and Zomato. A primary concern is these platforms’ increasing involvement in quick-commerce and private-label brands, which the NRAI believes undermines fair competition and threatens the survival of independent restaurants.
Mr Kalra stressed the need for increased dialogue between the restaurant sector and aggregators to address such issues collaboratively. While acknowledging some positive contributions by the aggregators, he warned that certain actions are not in the broader industry’s best interest and called for mutual understanding to resolve tensions amicably.
He believes that if the government grants industry status to the restaurant sector, allows input tax credit under GST, and resolves disputes with aggregators and service charge regulations, the industry could surpass current employment projections. Instead of the anticipated 1 crore jobs by 2028, he argues that with the right support, the sector could generate 1.5 crore jobs — a 50% increase over current estimates.
He also reiterated that the restaurant industry plays a vital role in supporting food delivery platforms and thus deserves the necessary tools and resources for sustainable growth.
