The Hindu Business Line : High bunker prices keep cruise operators off Indian ports

New Delhi, Sept. 5 High bunker prices, lengthy process of immigration and customs checks, and lack of separate, clean infrastructure at the ports for passengers are some of the issues that discourage international cruise operators from calling on Indian ports.

“If the bunker prices hover at $650 a tonne internationally, it costs $1000 in India on account of duties. With fuel accounting for 20 per cent of operating cost of a cruise ship, high bunker prices push up the prices making it financially unviable,” Mr Oneil Khosa, Vice-President, Investment Manager (Cruise and Ferry Funds), The Netherlands-based DVB Bank, said in a conference organised by FICCI here on Thursday.

“Several firms have shown an interest in operating in India, but fuel costs and service tax make it difficult for us to work out a viable model,” he said.

Unavailability of berths

Unavailability of dedicated passenger berths emerged as another key issue for cruise operators. “There were times when Star Cruises had been allocated non-passenger berths. Since the cruise users are typically high-income segment people, they look for good soft infrastructure as well,” Mr Jackson Loy, Vice-President, Marketing and Sales, Star Cruises, said. Star Cruises started services on Mumbai-Lakhshadweep and Mumbai-Goa routes 2005 onwards with Superstar Libra, but the company withdrew services in two years. There have been times when cruise liners have been allocated coal berths in Goa, making it quite inconvenient for passengers.

Fixing fiscal regime

“Under the cruise shipping policy, which was approved by the Cabinet recently, the Centre will be establishing an appropriate fiscal regime consistent with the overall fiscal policy of the Government through budgetary measures,” Mr R. Gupta, Joint Secretary-Shipping, said. Thus, the Shipping Ministry and the Tourism Ministry would have to route the demands for low taxation regime to the Finance Ministry as part of the Budget proposal.

“The Government is engaged in ironing out certain issues like taxes on bunkers and speeding up immigration procedures to give a boost to cruise tourism,” Mr A.P.V.N. Sarma, Secretary, Shipping, said.

The Government has planned to set up dedicated cruise terminals in four ports under public-private partnership (PPP) model. “As part of the cruise shipping policy adopted by the Government in June this year, the Ministry of Shipping has planned to set up cruise terminals at Chennai, Mumbai, Goa and Kochi ports in the first phase,” Mr Sarma said.

“For enabling ports to optimise their yields, the Government proposes to give incentives to ports so that they could strike a balance between high revenue generating cargo ships and cruise ships,” he added.