Even though it has a vast potential for growth,
considering the nation’s extensive coastline and over hundred navigable rivers.
Budget 2024 has announced a couple of tax incentives for foreign cruise liners.
While this is a step forward, experts
say significant infrastructure gaps hinder the industry’s growth.
Considering
the taxation regime, no specific Goods
and Services Tax (GST) concessions have been proposed, and ticket sales will
continue to attract 18% GST. In the case of non-resident cruise ship operators,
a specific provision has been introduced whereby only 20% of the amount
received by it for the carriage of passengers will be deemed to be income and
taxed accordingly. Second, the lease rentals paid by the non-resident cruise
ship operators shall be exempt from tax in the hands of the recipient foreign
company till assessment year 2030-31 if both these companies are subsidiaries
of the same holding company.
“We could
see three-four more cruise liners entering the Indian market in the near future
if the government addresses the existing challenges, including improving port
infrastructure and streamlining regulatory processes,” says JurgenBailom,
President and CEO of Waterways Leisure Tourism that operates cruises under the brand of Cordelia Cruises. He says
cruise services should be exempted from tax collected at source, adding that it
will reduce costs, boost bookings and benefit the industry and the economy.
Cruise
owners are also worried about regulatory issues—like the ban on casinos along
the Indian coast, except Goa. “Casinos add
excitement to the cruise experience, attracting travellers seeking
entertainment and leisure,” says Bailom. Cordelia Cruises can open its casinos
only when its ships have left India’s territorial waters.
According to Sanjay Basu, Chairman of Adventure
Resorts & Cruises, which operates a 23-cabin luxury river cruise ship MV
Mahabaahu on the Brahmaputra, among others, there is an urgent need to simplify bar licensing, allow onboard
casinos to compete with international vessels and streamline permissions for
operating spas. He says water-to-land connectivity infrastructure should be
enhanced with more and better piers, jetties, quays, marinas and ports. “Cruise
passengers should be able to disembark and seamlessly step into their
destination, as they do in the Mediterranean, Aegean, Adriatic, Norwegian and
Alaskan seas,” says Basu.
Since the government has rolled out incentives for
foreign cruise liners, domestic operators are concerned about potential
competitive disadvantages. “Local industry must be given a level playing field
with larger international players,” says Raj Singh, founder and chairman of
Antara Cruises, India’s largest river cruise operator. He says special
attention should be given to river cruises, as the operators cannot leverage
economies of scale.
“Since river cruise ships are smaller, with fewer
number of cabins, we have to charge Rs 30,000-60,000 per night, much higher
than international liners,” he says. He
suggests that the government should recognise cruise as an industry and provide
capital subsidies as a form of viability gap funding.