The government wants to increase the number of cruise tourists to 40 lakh in five years from last year’s 1.80 lakh, Union minister Nitin Gadkari said today. Given the right impetus, the number of tourist ships visiting India can go up from the present 158 to about 955 per year, the ports and shipping minister said at a special event on cruise tourism here. Gadkari said the revenue benefit will shoot up to Rs 35,500 crore in 2022 from the over Rs 700 crore last year. Speaking on the occasion, David Dingle, the chairman of Carnival UK, that controls 42 per cent of the global cruise tourism market, flagged a slew of concerns on taxation and port charges, which he said are higher by 50 per cent when compared to the developed world. “Anything to do with cruising in this country must not attract any GST whatsoever. Not only it is about money, (but) in principle, the cruise industry would not come to a part of the world where it has to pay GST on the ticket price and on the sales made onboard. That does not happen,” Dingle said. “We need to think about it as an industry operating in international waters. The place of consumption is really important. The place of consumption is almost entirely on the high seas. And for that reason alone, GST should not apply,” he said.
Calling for a withdrawal of the GST, Dingle said, “We would not bring our ships here in any significant numbers if cruising attracts any GST.” Speaking after Dingle, Gadkari said the ministry had not thought about GST, but assured that it will represent the case to the Ministry of Finance along with the Tourism Ministry. It can be noted that the Shipping Ministry has already moved the GST Council, the highest decision making body under the recently introduced indirect tax regime, to exempt the cruise tourism sector from GST at par with other nations.
At present, cruise tourism is not taxed and the Shipping Ministry wants to keep it out of the GST regime in order to boost the industry. “Major cruising nations like the UK, the US and Germany have zero rate domestic cruises. India should also have zero rating for cruise tourism as it is in nascent stage in the country and such steps will provide it a much-needed boost,” it said in a proposal sent to the GST Council.
Dingle also flagged issues with income tax. “We have to have the right to repatriate our profits through double tax treaties. And that means that domestic profits have to be repatriated to our fiscal bases through double tax treaties,” he said, underlining that India is not yet so big a destination to host its own companies.
Dingle also said that while Mumbai Port Trust has reduced its tariffs, the transit charges are very high.
Docking at a smaller port like Goa results in charges of up to Euro 50,000 as against Euro 15,000 for developed ports in the Mediterranean Sea, he said, adding, “port costs must reduce by 50 per cent to be competitive.”
“The opportunity is enormous, you are doing a fabulous job, ports are on side. But let us also encourage your Finance Ministry here also to recognise the enormous economic benefits cruise industry can bring to this country and help us with those tax issues so we bring many ships to India,” Dingle said.
Earlier, citing estimates presented by an international consultant which seem to have been used to fix the targets, Mumbai Port Trust Chairman Sanjay Bhatia had said the number of ships will go up to 955 from the present 158 ships. The size of the vessels which call will also increase, with a single ship expected to carry 4,200 passengers as against the present 1,250.
Gadkari said 80 per cent of the traffic will be concentrated in Mumbai and announced that construction of a Rs 300-crore dedicated terminal will begin in 15 days. Each of the tourist will spend USD 100 per day while the ship is anchored in a city like Mumbai, Gadkari said, adding there will be enormous benefit to downstream sectors like hospitality, car rentals, and food and beverages.