Concern over infrastructure glitches, complex rules

Eating out is coming of age in India and guidelines will soon follow, if the Food Safety and Standards Authority of India (FSSAI) has its way.

Come February 4, eateries and restaurants will require a food business operator licence from FSSAI to conduct business. While eateries and hotels note that the regulatory mechanism is a ‘step in the right direction’, infrastructure glitches and processes continue to be an issue.

Pradeep Sehgal, CEO, Sub-One Hospitality, the company that owns restaurant chains such as Moti Mahal, Quiznos, Tandoori Trail and Rajdhani, says: “The whole process needs to be streamlined. In many places the infrastructure for registration is not yet in place.”

Those within the industry say that since this is a State subject and some States are not yet ready, there could be another extension of the deadline. However, an FSSAI official said no extension was being considered.

On how this mandatory licensing will impact business, hoteliers and restaurant owners say operating costs are expected to go up by 3-5 per cent. This may not impact pan-India chains but small stands and unorganised players will be hit.

According to the rules, if a restaurant is found to be operating without a licence, the authority can penalise it and even have it shut down. Non-compliance will attract a penalty of ₹5 lakh.

“FSSAI guidelines state that random checks can be conducted and the penalty is huge. The discretionary powers can be misused by authorities. We have appointed an agency to meet all our compliance requirements,” said Sehgal.

Compliance challenge

Under the guidelines, every restaurant in every city will require a separate licence besides a central licence. Some of the guidelines include hygiene and source of origin. Other steps include the cleaning schedule, a no-smoking zone and temperature control for frozen food.

Samir Kukreja, former Managing Director of Nirulas, says: “It is not just the hotels and restaurants but also suppliers that need regulatory compliance”. The guidelines will see a large shift from the unorganised to the organised sector, he said.

“It is an evolving process and eventually everybody will be brought under the legislation. Several States are still grappling with the infrastructure needed to bring compliance,” says Prakul Kumar, Secretary General of the National Restaurant Association of India.

SM Shervani, President of the Federation of Hotel & Restaurant Associations of India, said that the association had earlier suggested that the food safety body should re-look at some provisions and even give an extension.

According to T Natarajan, Honorary Secretary of South India Hotels and Restaurants Association, though compliance is inevitable, the Act it needs amendments as some rules are impractical.

“If the law is implemented from day one, most of the food outlets in the country may have to shut down.” For example, he says, according to one of the rules, restaurants should buy meat only from Government-approved abattoirs and suppliers.

However, there are not enough facilities to cater to all the restaurants.

According to NRAI data, the overall food market was worth ₹247,680 crore in 2013. Of this, licensed standalone chains accounted for ₹55,210 crore.

With inputs from R Ravikumar in Chennai

(This article was published on February 3, 2014)
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