The Indian Amusement Industry is expected to grow at a CAGR of more than 25% with the annual revenue of at least Rs6250 crore ($884million) by 2022. Ahead of the upcoming IAAPI Amusement Expo in March, Pradeep Sharma, President, Indian Association of Amusement Parks and Industries (IAAPI), sheds light on the industry’s accomplishments and challenges.
What were the key accomplishments and challenges in 2018 for the Amusement Park industry? What do you look forward to in 2019?
Post the GST revision from 28% to 18% since January 2018, the amusement industry has not really picked up as it is still recovering from the major impact it had suffered ever since service tax of 15% that was imposed in 2015. The industry was under double tax bracket paying state entertainment tax and service tax before GST was implemented. Later, a GST of 28% was imposed on the amusement industry, which plays a pivotal role in the Indian tourism sector. The industry is still recovering from the effect it had suffered for the past two and a half years.
IAAPI took up the issue of GST and made numerous representations to the Central Ministry, GST Council and also to various State Government, Finance and Tourism department to reduce the GST. With IAAPI’s strong representation, alongside the support of industry members from across the country, we were able to get the GST slab reduced from 28% to 18% with ITC.
After one clear year of GST at the rate of 18%, the industry still faces challenges in terms of revenue growth, which has remained the same. However, the footfall to amusement parks has seen a drop in some parts of the country, which is a concern. The industry is showing signs of recovery, but given the operational cost for running the parks and seasonality of the business, the recovery is very slow. Hopefully, in 2019, the industry should see an upward trend.
What problems is the industry currently grappling with at the moment?
The need of the hour is good public infrastructure and an industry status to the Indian amusement industry. The overall development in terms of roads, highways and public transport will help increase connectivity for the citizen which will also increase tourist footfalls to tourist destinations and to amusement parks as major parks and future development in this sector is going to be away from the city limits.
Amusement parks are recreational places for families and they help strengthen family bonding. It should, therefore, be considered as a social infrastructure which provides activity-based tourism for all age groups compared to the traditional parks or other entertainment products like cinemas.
Currently, water, power and other utilities’ supply for amusement parks are procured at a commercial rate. Industry status will help in getting the basic utilities at industrial/concessional rates, which will economize the operational cost.
What strategies have you put in place to promote the industry?
As the amusement park sector plays a pivotal role in the Indian tourism sector, IAAPI is meeting various state tourism boards to promote amusement parks through its promotional campaigns in India and aboard as done in countries like Singapore, Dubai and Hong Kong. This will help boost visitor footfall to the region and will help the industry grow.
In continuation of our efforts, IAAPI also met the secretary, Ministry of Health and Ministry of Sport, Government of India, to promote the amusement park sector as social infrastructure. The objective of the meeting was to “nurture amusement park for making a healthy and sporting nation.” During the meeting, IAAPI emphasized the benefit of the amusement park in providing active outdoor recreation, encourage children and youth to engage in physical activities through outdoor games—both educative and entertaining.
IAAPI is participating at various tourism-related events and investor meets organized by the tourism board to promote the amusement park sector. IAAPI also has its representation on National Tourism Committees of leading associations and chambers of commerce.
Unlike Hong Kong, Singapore, and Dubai, which has shown a massive growth, the Amusement Park industry in India is still at a nascent stage. What do you think are the reasons for this slow growth curve?
Countries such as Hong Kong, Japan, China, Singapore, Australia, Dubai and USA thrive on unique and world-class amusement parks and theme parks for tourism because the government in certain such countries have invited key players to set up amusement park near tourist destinations (close to the sea), reclaim land, infused funds, besides incentivizing this industry for its promotion. This helps in the growth of the amusement park industry and creates job opportunities and foreign funds entering the country.
How different is the Indian Amusement Park industry from the rest of the globe?
From a global perspective, going to an amusement park along with family and friends once or twice in a year is a culture. In India, amusement parks or, for that matter, tourism attractions have to face challenges in terms of infrastructure and connectivity. At times, visitors spend more time on roads than at the parks. Therefore, Indian visitors think twice before going to an amusement park.
Given the infrastructure problem in India, investors are not willing to spend on huge amusement parks, which require a large land bank which is available away from the city limits because of public infrastructure and connectivity issue. Therefore, to make the project viable, investors invest in small parks by doling out affordable ticket prices. Internationally, such tourist cities and weekend gateways are created giving various attractions to choose from for the tourist.
Moreover, 70% of our population is the middle-class and the lower middle-class. Huge infrastructure cost for setting up an amusement park along with a high tax rate (GST) added to the ticket put a damper on the existing operations and discourages new entrants to set up or expand. This is also one of the main reasons why international brands are reluctant to set up parks in India.
What steps must the industry take to make the Indian Amusement Park industry on par with those of the U.S., Europe, and the Middle East?
The Indian amusement park sector needs to grow as a social sector and it requires regulatory support to attain its growth potential. Excess land on long-term lease and subsidies/fiscal incentives should be given to amusement parks in each state as part of the promotion of tourism, such as stamp duty exemption, electricity duty exemption, GST exemption for specified years, capital investment subsidy, employment cost subsidy, etc. This will encourage parks to install international high thrill rides and attractions on par with the amusement industry in the U.S., Europe, and the Middle East. To bring world-class rides and attractions in India, the government must consider providing import subsidies.
Required skillsets for amusement park should be part of the hospitality curriculum so that the industry is able to get skilled manpower. Permission and licenses should be made easier and conducive to set up and operate an amusement park.
To encourage local manufacturers to meet world-class quality rides, the government should incentivize more to exporters of amusement rides from India. This will not only help promote the ‘Make In India’ initiative but will also encourage local parks to buy international class rides made in India at a competitive price.
Tell us about the upcoming IAAPI Amusement Expo. What is the theme of this year’s expo? Please shed light on the activities planned.
The 19th Amusement Expo will be from March 6 to March 8 in Mumbai. The event is supported by the Ministry of Tourism, Government of India, under its banner, ‘Incredible India.’ The exhibition will witness the largest gathering till date of over 131 exhibitors from India and 19 countries, spread across an area of 10,000Sqm. This year, the participating companies are from Bulgaria, Canada, China, Dubai, France, Germany, Hong Kong, Italy, Kuwait, Luxembourg, Philippines, Russia, Spain, The Netherlands, Turkey, UK, USA, and India.
Over 4,000 trade professionals are expected to visit Amusement Expo 2019, including key decision makers from the amusement industry, real estate and mall developers, resorts & hotel chains, architects, government officials from tourism boards, museums, and science centers.
Concurrently, events which will be organized on the sidelines of the expo, are Networking Evening, FEC Connect conference and national awards for Excellence 2018-19.