The Hindu Business Line : Kochi cruise shipping may face windy weather

Unless the berth hire and other charges for cruise vessels at Kochi port are rationalised, many liners may suspend calls at the port, a popular destination among cruise operators. — K. K. Mustafah

V. Sajeev Kumar

Kochi Port Trust’s bid to attract more cruise vessels this season may not succeed as fewer ships than earlier estimated are likely to call at the port due to various reasons.

One major factor is the unfavourable tax regime, which is a disincentive to cruise shipping, according to an official of the port.

The recent global financial turmoil too would have an adverse impact on the cruise liners earlier planning to come to the port, he told Business Line.

The official pointed out that some of the leading cruise companies offering services to Kochi had already indicated their plans to suspend the calls, complaining that the various types of levies, such as service tax, tonnage tax, VAT, entry taxes, bunkering costs, all taken together, were proving too much for them.

Last year, the vessels of these companies had made 10 calls to Kochi as part of their Goa-Kochi-Lakshadweep-Colombo as well as Kochi-Mumbai circuits.

In the past four years, there had been a steady rise in the number of calls by cruise vessels at Kochi — from 28 four years ago to 42 last year.

“The port is not making much money from the handling of these vessels but we are committed to providing services, hoping that cruise tourism will promote tourism in the State,” said the official. The rationalisation of the tax structure, he felt, would not only boost foreign cruise traffic but also the domestic market.

In the absence of such rationalisation, domestic tourists would opt for other modes of leisure travel, available at cheaper rates. But Kochi port authorities are not giving up yet, and are pinning a good deal of hope on internationally renowned cruise liners such as Queen Mary II and Queen Elizabeth, by highlighting the locational advantage of Kochi being on the international maritime sea route.

The port authorities have already received confirmation from four cruise vessels for the Volvo Ocean Race India Stop Over, due to be held next month.

A senior official of a shipping company handling passenger vessels in Kochi port, said that, contrary to what the port authorities might say, the charges levied by the port for a cruise vessel were steep.

The berth hire for a cruise vessel in the BTP Jetty was almost double the tariff collected by the port authorities at Ernakulam wharf. Besides, a cruise vessel had to spend around $3,000 in Kochi for an average nine hours berthing, which was much higher than in any other port, he said.

Some Policy suggestions

The Government’s Cruise Shipping Policy suggests that the sector is growing at 12 per cent per annum globally and cruise tourism has tremendous potential in India, with its very long coastline and various unspoiled tourist destinations.

Yet, the country is yet to see the kind of growth being witnessed in Latin America and South-East Asia.

The policy suggests that efforts will be made to attract investments in Indian flag cruise-liners; also, the foreign flag cruise ships will be permitted to make calls at different ports along the coast through relaxation of various provisions in the Merchant Shipping Act.

The Cabotage relaxation, in force till December this year, will be extended for another 10 years. The fiscal environment should be conducive to encouraging cruise ship itineraries in Indian ports, while encouraging domestic tourists to make use of the variety of entertainment/services on board on domestic circuits.

The policy, which has been approved by the Cabinet, is of the view that the 33 per cent duty on bunkering is prohibitive, steep enough to render cruise shipping in Indian waters highly uncompetitive. The Indian flag vessels thus are clearly at a disadvantageous position vis-À-vis their foreign flag counterparts having access to cheaper bunkering facilities.

Besides, the Government levies service tax on on-board services such as massage, beauty parlour, sauna, etc., if the cruise ship is on a coastal circuit.

The policy also indicates that the Government is considering including cruise shipping itineraries in India offered by luxury cruise liners as a permissible mode of travel/destination under the LTC scheme, considering the emergence of cruise shipping as a popular leisure activity.