NITI Aayog proposes single liquor licence, removal of Eating House Licence for hospitality sector

Hotel developers, restaurant owners and homestay operators could soon see a sharp reduction in regulatory burden if NITI Aayog’s latest recommendations are implemented. In a comprehensive report on tourism reforms, the government’s policy think tank has proposed doing away with several approvals, extending licence validity and easing construction norms to make it easier to invest in the hospitality sector.

The recommendations are part of NITI Aayog’s report, Unlocking Growth in Tourism and Hospitality Sector, which identifies regulatory bottlenecks as one of the biggest hurdles to tourism investments in India.

One of the key proposals is the introduction of a single liquor licence for hotels operating multiple restaurants, bars and service areas within the same premises. At present, hotels in many states are required to obtain separate licences for different outlets despite operating from the same property.

The report has also recommended a single Health Trade Licence covering all ancillary services offered by hotels, replacing multiple municipal approvals currently required for activities such as restaurants, swimming pools, spas and other facilities.

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For restaurants and food businesses, NITI Aayog has proposed removing the requirement for an Eating House Licence, arguing that it duplicates approvals already covered under food safety and municipal regulations. It has also recommended increasing the turnover threshold and extending the validity period for FSSAI registrations and licences, along with longer validity for liquor licences to reduce recurring compliance costs.

The report also calls for significant changes in building regulations governing hotel projects. It recommends relaxing floor area ratio (FAR) norms, removing ground coverage restrictions where possible, reducing parking requirements, lowering minimum road-width conditions and removing minimum plot size requirements for low-rise hotels. According to NITI Aayog, these changes could increase the number of hotel rooms that can be built on a given parcel of land while reducing construction costs.

To encourage alternative accommodation, the think tank has proposed raising the cap on the number of rooms that can be offered by homestays and removing the requirement for local authority No Objection Certificates (NOCs) for registration, citing examples of states that have already simplified these rules.

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The report further recommends scrapping project-stage approvals by the Ministry of Tourism and de-linking hotel star classification from the grant of licences, approvals and institutional finance, arguing that classification should remain a market-driven quality benchmark rather than a regulatory requirement.

NITI Aayog has also proposed wider use of digital approval systems, including Auto-DCR scrutiny and integration of departmental No Objection Certificates into building permit portals to reduce delays in project clearances.

According to the report, hotel projects in India typically take 36 to 48 months to become operational, compared with 12 to 18 months in several ASEAN countries. The resulting delays increase financing costs and slow the creation of new room capacity despite strong investor interest.

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