Govt eases rules for budget hotels seeking food licences

• Budget hotels will not require star rating certificates for seeking food safety licences
• The hospitality industry in India is expected to grow at a CAGR of 16.1% in 2022, according to a report by KPMG

NEW DELHI: The government has relaxed norms for budget hotels in procuring food safety licences to promote ease of doing business for micro, small and medium enterprises (MSMEs) in the hospitality industry.

The move comes in the wake of the Food Safety and Standards Authority of India (FSSAI) receiving several representations from stakeholders to review the provisions requiring hotel food business operators (FBOs) to furnish star rating certificates from the ministry of tourism’s Hotel & Restaurant Approval & Classification Committee (HRACC) while applying for a fresh licence or to renew a licence.

FSSAI, the food safety regulation arm of the health ministry, has said budget hotels will not require star rating certificates for seeking food safety licences.

“It has been brought to the notice of FSSAI that the scheme of certificate of star ratings to the hotels by the ministry of tourism (HRACC) is voluntary and many hotels particularly small hotels do not go for star certification under the scheme. However, licensing authorities insist on the production of the certificate of ratings even from small or tiny hotels at the time of applying for fresh licence or renewal of licence. As a result, the hotel industry is facing difficulty in getting licences for hotels," Parveen Jargar, joint director (regulatory compliance), FSSAI said in his order dated 7 February.

Mint has reviewed a copy of the order.

“As per the licensing criteria, hotels with ratings of five star and above require central licences and hotels with rating four star and below with a turnover above ₹12 lakh require a state licence. It is clarified that the criteria for hotels for state licence includes both star category hotels (one star to four star) as well as non-star category hotels, including all those hotels that have not opted for star rating," the order said.

The ministry of tourism has formulated a voluntary scheme for classification of operational hotels under the star category—5 Star Deluxe, 5 Star, 4 Star, 3 Star, 2 Star, and 1 Star—and the heritage category—Heritage Grand, Heritage Classic, and Heritage Basic. The aim is to provide contemporary standards of facilities and services available on the hotels.

“Small and budget hotels will now have an opportunity of improving their services instead of running around for paper work. This will encourage the hotel industry," said Arup Mitra, professor, health policy research unit at the Institute of Economic Growth. The hospitality industry in India is expected to grow at 16.1% CAGR in 2022, according to KPMG.

India Brand Equity Foundation, a trust established by the department of commerce, ministry of commerce and industry, said the travel and tourism sector in India comprised 8% of the total employment opportunities generated in India in 2017, providing employment to about 41.6 million people during the year.

The FSSAI decided that hotel FBOs will have to upload on the online food licensing and registration system (FLRS) a declaration stating whether they are star or non-star hotel. In case of star hotels, they will be required to submit a star certificate issued by the ministry of tourism.