India’s food services industry is set for remarkable growth, with projections indicating a surge to ₹7.76 trillion by 2028 from the current ₹5.69 trillion, reflecting an impressive CAGR of 8.1%. This expansion is driven by a confluence of factors, including expanding market opportunities and a positive economic climate. Notably, rising income levels have spurred a shift in consumer behavior, with millennials and Gen Z buyers playing a significant role in this anticipated growth. The sector encompasses catering and delivery services, but excludes the hotel industry. The food services industry has fully recovered from its post-covid slump, when it contracted to ₹2 trillion. Prior to the pandemic in 2019, the sector had reached ₹4.23 trillion, as per the India Food Services Report 2024, released by the National Restaurant Association of India in collaboration with market research agency Kantar. In 2024, the sector secured the third-largest industry position in India, trailing retail and insurance, with a value of ₹5.7 trillion. While the retail sector dominated with ₹62.9 trillion and insurance at approximately ₹7.9 trillion, the food services industry stands as a prominent contributor to the Indian economy. A key trend within the food services industry is the accelerated growth of the organized sector compared to its unorganized counterpart. In 2024, the organized segment was valued at ₹3.66 trillion, while the unorganized sector stood at ₹3.2 trillion. These figures are projected to experience significant growth by 2028, with the organized segment expected to reach ₹7.76 trillion, while the unorganized segment is projected to grow to ₹5.69 trillion. Furthermore, in 2024, the organized segment commanded 52.9% of the market share, compared to the unorganized segment’s 47.1%. By 2028, the organized segment’s share is projected to increase to 57.7%, while the share of the unorganized segment is anticipated to decrease to 42.3%. This signifies a notable shift towards the organized sector over the next few years. Nitin Saluja, co-founder of cafe chain Chaayos and joint secretary of the association, highlighted the significant size of the industry, stating that it accounts for 1.9% of the nation’s GDP and contributes around 1.4% of the total GDP collected. This substantial contribution underscores the industry’s role as a major economic driver. The employment dynamics within this significant industry indicate substantial growth, solidifying its position as a major employer. In 2024, the industry employed 85.5 lakh individuals, a figure projected to increase to 103.21 lakh by 2028. This growth underscores the sector’s expanding importance in providing employment opportunities across various roles and skill levels. The industry boasts the second-largest employment base in the country, with an anticipated rise from 85.5 lakh jobs currently to 103.21 lakh employees over the next four years. Saluja further shared that the financial year will witness a similar 8% growth for the sector, with the top nine cities contributing 60% of the revenue generated by the food and services sector. The food delivery market is also experiencing robust growth, registering approximately 22%. Recognizing the need for targeted support and policy frameworks, the sector is advocating for a dedicated ministry focused on its needs. This would facilitate faster growth and enable a better understanding of the challenges faced by the industry. The industry is also seeking ‘industry status’ for the food services sector, which would provide further impetus to growth and encourage enterprise and entrepreneurship. Additionally, the industry is proposing two options for GST slabs, one with a 12% GST rate and input tax credit, and the current 5% GST rate without input tax credit. The availability of credit would enable restaurants to pass on the benefit to customers. The Indian food services industry is on the cusp of significant growth, driven by evolving consumer preferences and a robust economic environment. However, the industry requires government support to address its unique challenges and unlock its full potential. By creating a dedicated ministry, granting ‘industry status’, and implementing favorable tax policies, the government can foster a more conducive environment for growth and create a thriving food services ecosystem in India.
