Last year, nearly 90 eateries from the organised sector shut down in Mumbai, based on the statistics provided by restaurant and hotel associations. Reasons range from archaic laws which provide the perfect breeding ground for corruption and the large number of licenses one should have in place to open a food establishment, among others. Anu Prabhakar speaks to people from the food industry to get to the crux of the matter
In the course of working on this article, we are let into a little secret — a popular inside joke among restaurateurs in Mumbai. “If you murder someone, only one policeman will come after you. But if you have a licence issue, 46 policemen will come after you,” chuckles Vijay Mehta*, the owner of a popular restaurant and bar in the city. If you want to laugh along, you need to know the background — according to Mehta, one needs to have anywhere between 30 to nearly 50 licences and NOCs (No objection certificates) in place before one can open a restaurant in the city.
The Indian Hotel and Restaurant Association says that a major shutdown was witnessed in areas from Mumbai Central to Fort. Representation pic only
According to Kamlesh Barot, director of VIE Hospitality and former president of Federation of Hotel and Restaurant Associations of India and Hotel and Restaurant Association - Western India, 80 to 90 restaurants shut down in Mumbai in the last year alone. The Indian Hotel and Restaurant Association puts the number closer to 90.
But others speculate that the unofficial number is higher. We share the statistics with Riyaaz Amlani, CEO of Impresario Entertainment & Hospitality Pvt Ltd and president of National Restaurant Association of India and he is shocked. “That’s all?” he asks.
The interiors of Aoi, which was shut earlier this year. File Pic
Archaic laws and high taxes
The Bandra-based pâtisserie The Mystery Box shut shop this week, on April 8, due to what a newspaper called an “inability to handle the rising overheads”. But co-owner Chef Shahzad Variava refutes the claim, explaining that the decision to close the popular eatery arose from having to deal with a troublesome landlord. “She knew that we were making money and started asking us for more money,” says Variava, adding that shutting a shop within a year of its launch is a great setback. Although the owners of The Mystery Box had enough funding to keep them going for a while, Variava explains that other young entreprenuers may be daunted by the high rental rates which can “kill” them no matter how good their product is. “Right now, we are operating from our kitchen which is also in Bandra and we are doing a lot of exhibitions and workshops. We will launch a new store soon,” says Variava, resolutely.
Breach Candy resident Rohan Patel* has a similar experience to share. Patel accomplished his long-cherished dream of owning a confectionery store which served French pastries by opening one in the posh locality in October 2014. But when we speak last week, he explains that his landlord asked him to vacate the premises and that he had to shutdown his eatery.
But to him, difficult landlords and high rental charges are only one among the many issues that he had to face while setting up his business. “We had to change our kitchen’s single phase unit to a 3 phase unit and change the meter. Officials from the Brihanmumbai Electricity Supply and Transport (BEST) kept asking us for numerous documents and kept saying that we need to fix this and that. We were stuck for days and finally realised that they are looking for money. The actual cost of this service is very nominal - Rs 700 perhaps, I am not sure. But I ended up paying nearly R9,000 for it," he adds.
And then, there are archaic laws — Patel has an amusing one to share. “If the board of your shop has lights inside it, you need a separate permission for that. We were warned that officials from the Brihanmumbai Municipal Corporation (BMC) will come and check but thankfully, no one came,” he adds.
Vishwapal Shetty of the Indian Hotel and Restaurant Association points out that a major shutdown was witnessed in areas from Mumbai Central to Fort in the past year. “Property tax has increased and so has the excise duty. While the excise duty was Rs 3,44,000 in 2013, there was a 50 per cent hike in 2014 and it became Rs 5,42,000. In 2015, there was another 10 per cent hike and it became Rs 5,98,000.” Shetty, and others, say this has killed small restaurants.
Restaurants also need to show that they have adequate space for car parkings — a 80 sq feet restaurant needs one car park — for a licence. “Tell me, where can you find 10 car parks in Mumbai? The traffic police department of the Mumbai Police, which has asked for this provision, does not have a car parking facility themselves!” exclaims Shetty.
Director of SID Hospitality, Mitesh Rangras’ Bandra-based sushi joint Aoi shut down earlier this year and in retrospect, he thinks the location and size of the eatery may have had some role in its shutdown. “Aoi was at the corner and close to religious establishments. They were all registered institutions and objected to us serving alcohol,” he explains. Shetty, however, explains that even if you do manage to get the license to serve alcohol in your restaurant, as per the excise rule, you can serve liquor only in a “demarcated area, like a 20 seater permit room”. “But you shell out R6 lakhs every year to renew your licence. How will you ever recover that money?” he asks.
Mehta points out that such “absurd” laws provide a breeding ground for corruption and that annual haftas to government and police officials run into lakhs. “Did you also know that technically more than 20 people are not allowed in a discotheque?” asks an exasperated Mehta.
Kamlesh Barot points out that restaurants also need a license to play live music. “A 2012 amendment to a 1923 act about playing live music in hotels and restaurants says that even if restaurants want to play music from a recorder, they have to pay R50,000 per month. If you are inside a hotel, then you have to pay R2,50,000 per month,” he says. He points out to other laws as well — women, he says, cannot work in commercial kitchens beyond 10pm in the organsied sector. “There is high taxation as well — restaurants have to pay 24 per cent in direct taxes and 38 per cent in indirect taxes,” he adds.
Riyaz Amlani, whose eatery Salt Water Grill in Chowpatty shut down in 2008, says the government should stop imposing huge rates of VATs on the industry. “Along with cigarettes and alcohol, restaurants are looked at as soft targets (by the government) while increasing taxes,” he adds.
Winds of change?
According to these associations, the previous government was in no mood to address the issue. “Last year, we met and spoke to former Chief Minister of Maharashtra Prithviraj Chauhan and made a presentation (of the issues the industry has been facing) for one and a half hours. He was very keen and promised us the world. But eventually, nothing happened,” says Mehta.
Barot, who also met the previous CM, says, “For five years, we worked with the Congress government for a single window licencing system and we worked on a portal that is more transparent in 2011. We got it approved but it was finally stuck in the CM’s office. Soon it was elections time, and he said that the next government will take it up and we had to reorient everyone with the plan,” elaborates Barot. And what is the current status of this proposal? “It is still stuck at the CM's office,” he replies.
But things seem to be on the cusp of change. A source from the business development cell, formed by the BMC last year to restructure licensing systems for every business, says that work on restructuring licencing rules in the food industry is “undergoing”. “We are at the final stages of getting an approval and streamlining the licences process. We will also reduce the reduplication of laws and will combine licences if it has to come from the same department,” she says, adding that the industry can look forward to the change “very soon”. Dare we toast to new beginnings in the food industry?
*Names withheld on request