India restaurant
[Representational Image]Reuters

With customs duty on key ingredients and imported foods increased in the Union Budget 2018, the next outdoor meal at your favorite restaurant may cost you dearly.

Finance Minister Arun Jaitley raised customs duty on olive, sesame and castor oils to 35 percent from 20 percent while the levy on miscellaneous food preparations is now 50 percent compared with 30 percent previously.

Customs duty of other products such as fruit juice and mobile phones was also hiked to boost the government's Make in India program and promote job creation.

In the food processing industry, customs duty has jumped five times to 50 percent for cranberry juice, while the duty on orange juice has been raised to 35 percent from 30 percent earlier.

The increase in customs duty follows the removal of input tax credit when the Goods & Services Tax on restaurants was reduced to 5 percent from 18 percent last year.

Olive oil makers such as Del Monte have already said prices will be hiked across the sector because of the steep increase in customs duty.

Most of the Italian and Mexican food chains make extensive use of olive oil for dressings and salads and also import specific types of pasta, sauces and rice.

The increase in customs duty adds further pressure on profitability, resulting in restaurant operators passing on the hike to consumers, according to experts.