Taxation pulls back cruise industry

Chennai: The cruise industry rues that high GST and customs duty are hobbling its growth and holding it back from realising its potential to generate Rs 35,000-crore revenue and two-and-a-half lakh jobs.

A study done by global consultancy Bermello & Ajamil and commissioned by the Shipping Ministry found the cruising industry has tremendous business potential. The number of ships making a port of call can go up from 158 to 955 and the number of passengers these ships bring in can grow multifold from 2 lakh to 40 lakh. This will help the cruising industry revenues grow from Rs 712 crore to Rs 35,500 crore and in turn provide jobs to 2.5 lakh people from the current employment of 5,000.

"This target can be achieved in a span of 5 to 10 years, provided some of the impediments that make the business unviable are removed. One of the main issues is taxation and once that become industry-friendly, infrastructure issues will naturally get resolved,' said Varun Chadha, Chief Operating Officer of Tirun Travel Marketing, an India Representative of Royal Caribbean Cruises.

Currently, the tickets and earnings come under the 18 per cent GST bracket, while the average tax across the leading cruising destinations globally is closer to zero. Further, every item consumed carries a 5 per cent customs duty while in other countries it is nil, he said. This is making Indian ports less competitive in the international cruising map.

"It would be prudent to incentivise the almost non-existent cruise tourism sector. It is recommended that cruise ship travel in India, including auxiliary activities be zero-rated or taxed at the lowest rate for a period of five to ten years," said the B&A study.

The government has reduced the port charges by 30 to 40 per cent over a year back and made it comparable with global standards. It had also brought in a standard operating procedure for different stakeholders of the industry.

The berthing infrastructure and the capacity to handle large ships that carry over 5,000 passengers are very limited at Indian ports. But the industry finds that once the taxation issues are resolved and more number of ships come calling, investments will pour in and this will help the country develop necessary infrastructure.