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Amit Mitra
M. Somasekhar

Hyderabad Oct. 28

The Kochi port may take the wind out of the sails of European cruise company Louis Cruises’ plans to make India one of its home ports from December, with the revenue-starved port planning to introduce passenger and service taxes that threaten to drag cruise business in deep waters.

The 74-year-old Louis Cruises is the second global cruise company attempting to set up a base in India, with Star Cruise earlier starting operations from the Mumbai port, but discontinuing the service after about two years due to tax-related issues.

The $320-million, Cyprus headquartered Louis Cruises has a fleet of 12 liners, with on-board entertainment, swimming pools, health clubs, casinos and duty free shopping facilities, operating from France, Italy, Greece, Cyprus and other places. It also runs 20 hotels.

Louis Cruises had drawn up major plans for India, making Kochi as the base port and initially offering three-night packages to the Maldives and Colombo, apart from a one-night high seas trip from December 2. It was to make about 30-40 calls at the port every year, with plans to increase the frequency further as the business grew.

Sources said even as the company was unrolling its road shows across the country, the Kochi port unveiled plans to introduce passenger tax at the rate of Rs 350 for every passenger that embarks/disembarks at the port, coupled with 10.3 per cent service tax.

Although the port has not yet officially announced the introduction of the taxes, it has reportedly informed the shipping agents concerned about the proposed tax, which is to be implemented with “retrospective effect.”

Mr Oneil R. Khosa, Chief Executive Officer and Managing Director of Louis Cruises India, said, “Yes, I have been informed about this move by our agents (in Kochi). If the port does introduce this tax, we will be seriously re-thinking our India plans.

“We have already priced our services aggressively and any additional burden in the form of taxes will throw it out of gear.”

If the fresh taxes are introduced, the company may either have to look for other Indian ports as home ports, which could be a difficult alternative considering the logistics involved in tourism business, or altogether drop its India plans.

The Kochi port has, of late, been facing a severe drought in revenue collections, especially due to the commissioning of the single point mooring by BPCL for crude unloading, which made a dent of about Rs 45 crore on the port’s annual revenue.

It has since been looking for other sources of revenue, including leasing out of its land-based assets and introduction of new charges. “As it is, we have to pay high charges for calling at the Kochi port, including pilotage and berth hire charges. Even without the passenger and service tax, this works out to about €15,000 a call, while it is about $2,000 at the Maldives or Colombo. Now, if one were to add new taxes, cruising to Maldives will be as costly as flying to say Singapore or Malaysia for a holiday — the whole concept of cruise tourism gets deflated,” Mr Khosa told Business Line here.

The company has already done up one of its luxury liners, the 525-cabin Aquamarine, to suit its India plans, including ethnic cuisines, a mix of ethnic and European on-board games and entertainment and visa-free travel.

It has also signed a MoU with Kerala Tourism Board for exclusive operations and joint marketing to promote tourism in the State. It now remains to be seen whether the project will set sail or not.

More Stories on : Shipping/Ports | Taxation

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