Traditional Street Food Business Model in India

Ever wondered how the hawkers and vendors contribute to a country's economy?

India is incomplete without the sounds of the street vendors, the buzzing of horns and the constant noise of vending slogan which engulfs every street. That’s the remarkable quality about our country, every street is unique in itself, every road has a different story, and every hawker with his own unique talented business going on.

Despite the law having legalised the activity from 2014. In past history, street vending was illegal in urban India for almost six decades. Yet street vending remains a viable source of employment for many.

Street vending is one of the oldest forms of retail in the country, the urban laws of Independent India regard hawking as illegal. The authorities often clear spaces which are regarded as public spaces, meant for civic use.

In most Indian cities the urban poor survives by working in the informal sector.

Why street vending was legalised? 

Street Vendors Act, of 2014 was the first legal recognition given to protect the rights of street vendors. The Act aims to protect the livelihood of street vendors and provide them with a conducive environment for carrying out their business. It covers all varieties of vending and defines the “mobile vendor,” “stationary vendor” and “street vendor.”

The Act mentions vending in a “street, lane, sidewalk, footpath, pavement, public park or any public place or private area.” It stipulates that cities will establish Town Vending Committees (TVC) with members drawn from all stakeholders—including hawkers themselves—at least once in five years, and carry out a survey.

Formal and Informal Sector Comparison:-

The capacity of India’s formal sector to generate employment has declined. On the other hand, the informal economy has multiplied and today comprises between 50 to 80 per cent of newly created jobs.

In the first half of India’s fiscal year, concluding in September, the number of employees registered with the national pension fund rose by 35%, compared with the same period the year before—a rise equivalent to 9M people. The number of firms paying the goods-and-services tax, an indicator of formal business creation, has risen from 8M to 14M since 2017. Online postings on recruitment sites suggest a similar rise in formal employment.

Government Support to Street Vendor's:

PM Street Vendor’s Atma Nirbhar Nidhi – a special microcredit program for street vendors. As per the scheme, the vendors can avail of a working capital loan of up to Rs 10,000, which is repayable in monthly instalments for the tenure of one year. The scheme covers 108 cities in the first phase. This has resulted in banks coming forward to lend money to street vendors, who’ve traditionally borrowed from the unorganised sector at exorbitant rates of interest.

In Asia, the growth of this sector is a result of the structural changes in their economies. Issues such as declining of jobs in the formal sector, rural unemployment, easy entering strategies, limited education, and less start-up capital were reported to be among the major reasons that contributed to the growth of this trade. The growth in this sector came into place because of the Economic Liberalization policy established in 1991. As an effect of this policy, extreme poverty was reduced from 36% to 24.1% in 1991-2000.

Street vending extends beyond its traditional definition, however. Seen from a wider perspective, it opens up new succession of economic activity, it’s a form of micro-entrepreneurship that can address the unemployment challenge confronting India. Therefore, their role needs and strengths must be factored into every aspect of urban development planning. The biggest thrust in favour of street vendors, though would come not from the government, but from strong and conscious public charity.