August 18, 2018 TnH Global 0

Cruise tourism seeks 5% GST waiver

After a couple of months, season will commence for luxury liners sailing in and out of India. Already the government has taken several initiatives to attract this segment of luxury tourism, although the nascent cruise tourism industry is asking for more sops. Several measures have been taken by the government to ensure that passenger liner companies once again put India on their business and tourism map.

In order to promote cruise tourism, the government has taken several steps like certainty of berth, removal of ousting charges to reduce overall cost, 42-66% discount in port charges, introduction of e-visa, and rolling out of e-landing card system. Further,, the Centre has simplified standard operating procedures to be observed by multiple agencies like port authorities, customs, immigration, security, state government, ship agents, tour operators, etc. Also, upgradation of existing cruise terminals, construction of new international cruise terminals, and preparing roadmap to increase tourists are also being considered.

A task force was also formed to develop an ecosystem to give a fillip to the cruise tourism. Even new cruise terminals are being developed in Mumbai and Cochin, besides upgrading the existing ones at other ports.

Due to these measures being undertaken during 2017-18, “a total of 1,62,660 cruise passengers visited six major ports in India, namely, Mumbai Port, Chennai Port, Cochin Port, Kolkata Port, New Mangalore Port and Mormugao Port,” said tourism minister K J Alphons in the Parliament, recently.

In India, the cruising season is primarily between October to May as monsoon-led choppy seas are not conducive to conduct any sailings during the rest of the months.

The Ministry of Shipping is working further on ways to increase these footfalls at the cruise terminals or in India. According to a report prepared by a consultant, by 2042-43 cruise tourism’s potential will only increase and India has the potential to attract 45 lakh tourists.

The same report also states that the government may earn Rs 35,500 crore from direct taxes levied on cruise liners that enter Indian ports. Currently, the government mops up Rs 712 crore from the same. If the entire potential is unlocked, as many as 955 passenger cruises may sail to India’s ports as against the present 139 passenger liners on the country’s eastern and western coasts during 2017-18.

As per a report by Cruise Lines International Association, “Asian source markets are becoming the new growth engine of the global cruise industry, demonstrating an exceptional 41% compound annual growth rate (CAGR) in passengers over the four years from 2012 to 2016. A total of 3.1 million Asians took cruises in 2016, 55% more than in 2015…Asia’s other major passenger source markets were Taiwan (2,37,000), Japan (2,15,000), Singapore (1,97,000), India (1,21,000) and Hong Kong (1,10,000) were the fifth and sixth largest Asian markets.”

The luxury liner industry is looking to increase the business manifold, but not all the global leading liners have entered the Indian waters. “We (cruising industry) are in a promising position,” said Nalini Gupta, Costa Cruise India head, while stating that there is potential in India to replicate what happened to the Indian aviation sector in the last couple of decades.

“Earlier there were only a couple of airlines operating, but the moment the sky was opened we saw low-cost carriers coming in and the rest is history. Even cruise tourism has the same potential, we just need to open it up for everyone and a similar competition will be witnessed,” added Gupta.

In order to become an increased cruise-friendly destination, “5% goods and services tax being levied on the tickets should be waived off as somewhere this is acting as a deterrent to further promote cruise tourism in India,” according to Varun Chadha, chief operation officer, TIRUN Travel Marketing, India Representative of Royal Caribbean Cruises.

Other demands from this segment of the tourism industry include waiving off entertainment duty, limiting customs duty levy on sailings up 12 nautical miles instead of 200 nautical miles, tax-free consumables on board international cruises, among others.

In fact, a decade ago, one of the cruise operators pulled out of Indian market due to customs duty and taxation related tangle with the government, wherein the government wanted operators to pay customs duty for products sold within 200 nautical miles and the ship owners presented that the customs rules should exist up to 12 nautical miles. Secondly, then, the cost to access port infrastructure and withdrawal of certain port charges also led to cruise tourism sailing into rough seas.

In order to press for their demands, over a dozen cruise liners in the Indian space have already formed an association called Indian Cruise Liners Association (INCLA). If successful, not only their business will get ramped up, but also the association would become stronger to steer the Indian luxury liner market.