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Indian Yachting Industry Slowdown

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A few years ago, the rich and famous of the country were known by the yachts they kept, the parties they threw on it - popularly known as yacht parties - and the money they lavished on such luxuries. So much so, that the blue waters of the Gateway of India would be crowded with white yachts jostling for space amidst the sprawl of fishing trawlers and passenger boats crammed with elephant abound, camera-wielding tourists.

But now, these yachts have become less visible; there are fewer whites in the sea of blue, and even the yacht owners - who flaunted them some years ago - are now regretting the investment. For many, it felt like a bad dream. The Indian yachting industry is sinking slowly and international yacht manufacturers could hardly sell a boat in India this year, according to data provided by the Royal Bombay Yacht Club.

The club, which maintains a registry of 90% of luxury boats imported into India, said it has registered none so far this year, compared with six last year and about 50 at the peak in 2008. One yacht is expected later this year. The yacht dealers, owners and potential owners, blame regulatory restrictions, rising prices and the lack of marinas to park their yachts, speed boats and catamarans. What's worse has been the rise in import duty to 48% from 28% on luxury boats this year by the central government.

The depreciation of the rupee has hammered the last nail in the coffin. "The duty hike has destroyed the yacht business completely. With the depreciation of the rupee and the hike in import duty, the cost of imported boats and yachts has gone up 40-50%," said Aashim Mongia, managing director at West Coast Marine Yacht Services.

More than 90% of luxury boats are imported brands such as Princess Yachts, Majesty Yachts, Silvercraft and Sunseeker Yachts. An economic slowdown in the country in the last few years has crushed new demand for imported luxuries. While the entry level boats can cost more than Rs 20 lakh (400,000€), the luxurious ones on the catalogue are worth north of Rs 50 lakh (1,000,000€).

Yachts, on the other hand, can cost the buyer crores (2,000,000€ plus). "Luxury boats are the things dropped from the shopping list first when a slowdown strikes. Business has come to almost a standstill," said Joe Nejedly, chairman of Indian Marine Federation and owner of boat-making company Praga Marine.

The troubles for this nascent industry, which was dreaming of prospering by selling highend luxury boats to the wealthy of India, started in November 2008 with the terror attack orchestrated through the Arabian Sea. After November 26, 2008, sailing was banned for three months. Even when the ban was lifted, strict restrictions were imposed.

While there aren't any official statistics, revenues at the peak of 2008 are estimated to be about Rs 150 crore (30,000,000€). Dealers say that several clients delayed deliveries or payment. In many cases, the deliveries have dragged on for more than a year. Some are looking to sell their boats, if a buyer could be found. As India remains a small market, there are very few yacht manufacturers in the country.

For instance, sailing is not allowed after sunset and there are restrictions on distances as well. While these are prudent security measures, the pleasure of sailing and partying at night has been killed, increasing reluctance among potential buyers.

"We can't go out in the sea at night. I am tired of my yacht. I don't enjoy it and it's not fun any more," said Mehul Choksi, chairman and managing director of Gitanjali Gems. Mahendra Doshi, executive chairman of LKP Finance, echoed Choksi's sentiment and frustration. "There are too many restrictions, but what can I do now? I would like to sell it if there is a buyer."

Dealers in the country complain that despite their attempts to seek a regulatory solution, they are stuck between the tussles of Navy, the Maharashtra Maritime Board, the Mumbai Police and the Coast Guard. The problem arises from the fact that there isn't any regulatory authority to legally register pleasure boats like sailing yachts. The Maharashtra Maritime Board registers only motorized vessels and not pleasure sailing vessels, in accordance with the Inland Vessels Act.

While the Mumbai Port Trust issues a certificate for sailing vessels, this document is not being accepted in other states, creating problems for the sailors who are frequently stopped by security agencies. A severe lack of infrastructure for boats has further embittered the luxury experience. "Mumbai has a beautiful skyline but I can't take sunset cruises with my family," complained Randip Singh of Shah Wines and an owner of three yachts. "The jetties are so narrow, and many a time my boats get damaged when they slam against the wall as the tide sets in."

Original Source Google News: Economic Times

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