India’s food services sector to touch ₹7.76 lakh crore by fiscal 2028: NRAI

The Indian food service sector is expected to grow by 8.1 percent to reach ₹7.76 lakh crore by fiscal 2028 from ₹5.69 lakh crore in fiscal 2024, the National Restaurant Association of India said on Tuesday.

In its India Food Services Report 2024, the National Restaurant Association of India (NRAI) said the organised food services segment is expected to grow at a CAGR of 13.2% through fiscal 2028.

This sector has recovered from the crisis caused by the COVID-19 pandemic, which caused it to shrink to ₹2 lakh crore in fiscal 2021, as against ₹4.24 lakh crore in FY20. In FY22, it recovered its losses and achieved ₹4.72 lakh crores, ₹5.3 lakh crore in fiscal 2023 and increased to ₹5.69 lakh crore in fiscal 2024.

According to the report, it is estimated that in fiscal year 2025 the size of the sector will reach ₹6.13 lakh crore. India will become the third largest foodservice market by 2028, overtaking Japan. The US remains the largest global market.

“Despite setbacks during the COVID-19 pandemic, the Indian restaurant industry has witnessed rapid growth… The post-COVID-19 recovery underlines the industry’s resilience,” said NRAI president Kabir Suri.

He asked the government to “recognise the socio-economic impact” of the sector and take immediate steps to harness its full potential.

The NRAI said the sector is the second largest employer, employing 85.5 lakh people in fiscal 2024, which is expected to grow to 1.03 crore in fiscal 2028.

The sector’s tax contribution is expected to amount to ₹55,594 crore by 2028, as against ₹33,809 crore in 2024

The share of the organised segment of the foodservice sector is estimated to reach 52.9 per cent of the total by FY2028 from 43.8 per cent in FY2024, while the share of the unorganised segment is expected to decline to 47.1 per cent by FY2028 from 56.2 per cent in FY2024, the report said.

NRAI Report Steering Committee Chairman Nitin Saluja stressed the need for a separate ministry for food services that could better understand the challenges faced by the sector, adding that this would help push the agenda for faster development of the industry.

He also stressed the long-pending demand for the sector to be given “industrial status” as this would encourage entrepreneurship and development.

Saluja also said that two GST options of 12 per cent with input tax credit (ITC) and the current 5 per cent without ITC must be made available to all restaurants. He added that the availability of ITC will enable restaurants to pass on the benefits to customers.

He said the sector was heavily regulated and called for a simplified and unified licensing and permitting policy across the country.

He also added that restaurants need to be able to operate longer hours, or even 24 hours a day, in cities with a vibrant nightlife to grow business and create more jobs.