The finance ministry holds the key to the rate of cruising growth in India

With a 44% share of the global cruise market, Carnival PLC is now eyeing Indian shores. However, David Dingle, the company’s Chairman, says there are a number of fiscal challenges the government needs to fix before India can emerge as a competitive market for global cruise operators. Excerpts from a conversation as Tradebriefs caught up with him on his last visit to India in August, 2017. Read On ..

Q: What are the challenges you see in India?

A: The Indian government, particularly the transport and tourism ministries are being very proactive in creating the conditions for cruising growth in this country. However, it is important that we strongly get this message out to the finance ministry because until there are fiscal changes, until the goods and services tax (GST) is completely removed for all cruise operations and also until we can repatriate profits through double tax treaties on domestic cruises – until we can do those things – there will always be a limit on the rate at which global cruise companies are prepared to grow this market. At the end of the day, the market will only grow if ships come to India but unless those fiscal barriers are removed, we will simply not bring as many ships. The finance ministry holds the key to the rate of cruising growth in India.

Q: How confident are you the government will consider the industry’s suggestions?

A: You’ve heard about the investment in cruise terminals and the work being done to make the processes involved in embarking and disembarking cruise ships as easy as possible. You’ve also heard about commitments to make ports operate more efficiently so that port charges can be reduced. I’m very confident that we will see a lot more progress in these areas but where I’m yet to see signs of commitment is from the finance ministry. I think it is important every one shouts that out loudly because the finance people in Delhi have to hear that message. Otherwise, they will be a brake on this big economic opportunity.

• Every cruise ship coming to India helps to earn Rs 10 crore
• Potential to be among the top three foreign exchange earners for India
• Cruise ship arrivals increased by 24% and cruise passengers by 52% in 2016-17
• Number of passengers is now 2 lakh
• The potential exists to make it 40 lakh passengers out of which Mumbai alone has the potential for 32 lakh passengers
• From 155 ships currently, the potential is for 955 ships of which Mumbai can handle 700
• Carnival PLC alone sold 181,000 cruises in India in 2016, registering a compounded annual growth rate (CAGR) of 31%

Q: How many ships are you looking to place in India?

A: We already have a ship operating here seasonally. It is a slow growth rate. In China, we went from one ship to two, progressively. In five years’ time, there could be five or six ships. When you’re building a market, it is a bit like test-and-learn. There may be moments when you’ve put too many ships too quickly and there may be other moments when you realise you need to put another one in. The precise rate of growth is hard to tell.

Tell us a bit about the domestic opportunity.

Almost the entire opportunity in India is the domestic market and it is the case in most other countries in the world. For instance, in the USA – which is the world’s largest cruise market – the vast majority of Americans are taking cruises that depart from their own shores. It is the same in Europe, in Australia and now in China as well. Our research shows customers wish to have shore cruises. Also, they need to be affordable. The duration determines the price.

Furthermore, people necessarily do not want to have to pay airfare on top of their cruise fare. All this means that cruising from India will largely be for Indians. That being said, there is a list of things we are working through and which we are fixing, to the advantage of the Indian cruise industry – be they making sure that customs controls do not get in the way, be they making sure that we have smooth transmission through our cruise terminals – but it is important that India becomes a competitive place for global cruise corporations to do cruise business. As a matter of money, but more as a matter of principle, we do need to get over the issues of GST and other fiscal issues I have already spoken about.

Q:Have you already developed your trading/channel partners?

A:The good news is we have already started. Today, around 200,000 Indians take a cruise every year and my company, through its Costa brand, has a ship based in Mumbai, each winter. We will shortly be starting our second season in December and we have already developed a good and reliable network of travel agents who are passionate about cruising and learnt all about it. We already also have a very good public relations campaign and I am extremely impressed by the amount of media coverage which cruising is getting in India. The other important thing – and we find this all over the world – word of mouth is extremely important. People don’t necessarily know a lot about cruising but when they talk to somebody who has been on a cruise, that is more often than not the thing that tips them over and encourages them to go on a cruise. The growth is exponential and that is how we will develop it here – word of mouth, distribution channels, great public relations – and top of it, some above-the-line advertising.

- TradeBriefs Bureau - 

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