India requires somewhere between 12 to 15 licences to begin a hospiatlity venture while the international average is 5, according to a report on Ease of Doing Business by Pahle India Foundation, a not-for-profit policy think tank.
Licences for the hospitality sector are not easy to acquire as there is no clarity on whether the sector comes under the central list, state list, or concurrent list.
"Even though Schedule VII of the Constitution of India does clearly state that what finds no mention in any of the lists, are considered to be part of the central list, but we know that this is not the case," the report said.
Licences and no objection certificates for the hospitality sector have to be procured not only from central government entities, such as Food Safety and Standards Authority of India (FSSAI), or state level entities like the excise, but also from hyper local institutions, such as, police, traffic police, fire department, and the local municipality.
"When it comes to our regulatory framework, India has chosen not to follow global standards, thus far. In the spirit of ease of doing business, and given that we have been pursuing it in oth er sectors, there is a need to revaluate the current regulatory framework," the report said.
The two major concerns of the hospitality and food services industries are prohibitive costs of starting a business and delays in obtaining licences and permits, the report said.
"Regulatory requirement for sector varies across states, cities, even locations within a city, and formats. Single window clearance, even if implemented in some states, has not been effective," the report said.
The report said that delay in procuring licences resulted in escalating operational expenses and entrepreneurs lost significant money and returns for this period.
The report recommends that the hospitality sector must be assigned a nodal ministry or department. This would make the policy environment for the sector more uniform.
The report suggests that since the retail sector has the Department of Industrial Policy and Promotion as its nodal department, a similar department could be created for the hospitality sector too.
"In many cases where there is such disparity in regulatory processes, the Centre has issued model acts and guidelines that states have adopted and enacted. This can be considered for the hospitality sector too," the report said.
The report also recommends that there must be some uniformity in licensing regime in each state.
"Every state must undertake a detailed audit of regulations necessary at the state and hyper local level, to facilitate uniformity, to identify and repeal unnecessary licences, and to do away with contradictory regulations," the report added.
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