COMMENTARY
INTERVIEWS
SPECIALS
CHAT
ARCHIVES

Cess-hit seafood companies shift from Kerala to other states

George Iype in Kochi

High labour costs and the state government's legal measures to recover one per cent cess on seafood exporters in Kerala has forced at least a dozen seafood processing companies to migrate to Gujarat, Orissa, Tamil Nadu, Andhra Pradesh and Karnataka.

Seafood exporters say the policies of the Left Democratic Front government in Kerala have nearly crippled the industry that used to have an annual turnover of more than Rs 15 billion.

For many months now, seafood-processing companies in the state have been on a warpath over the government's decision to initiate legal action against them to recover a one per cent levy imposed on the exporters.

Government claims that the one per cent cess is to build a corpus fund for the Fishermen's Welfare Fund to provide financial aid to the traditional fish workers in the coastal areas.

But officials in the SeaFood Exporters Association of India say the government initiative is discriminatory and is stifling the seafood industry that has been in recession and stagnation in the last few years.

According to SFEAI president Elias Sait, the government has slapped the levy only on the 120-odd seafood exporters, but spared other companies in the business. Nearly 30 of these companies have the licences to export to the European Union countries.

"The main problem is that only one segment of the industry is being targeted on the issue of cess. Our demand is that the government should spread the cess net to all the players in the seafood business, not the exporters alone," Sait told Rediff On The NeT.

The SFEAI estimates say the seafood export sector in Kerala is exporting less than 50 per cent of that total catch and the remaining is being consumed domestically. Therefore, Sait feels the government's new tax policy should include others like peeling shed owners, boat owners and fish auctioneers.

"We are also in favour of a welfare fund for traditional fishermen and fish workers. But such a fund could be adequately raised if the government levy is imposed on all sections involved in the business," the SFEAI official added.

As the row between the government and the seafood industry continues, at least a dozen companies are migrating to other states.

SFEAI officials said, already seven companies have shifted their bases to Andhra Pradesh, three to Karnataka and two each to Orissa and Gujarat.

In the last few years, Kerala's share in the total Indian seafood exports declined drastically. For instance, in 1997-98, seafood exports from Kerala accounted for 89,000 tonnes; during 1998-99, they shrank to 61,000 tonnes.

"It is impossible to fight against a government and win in Kerala. Therefore, I have decided to shift my operations to Tamil Nadu where the government provides incentives to seafood exporters," K M Nambiar, owner of a seafood processing and exporting company in Kochi, said.

He said it is the government apathy that is driving various industrial units out of Kerala. "In the past few years, government inaction has forced the cashew growers to desert the state and go over to Tamil Nadu and Karnataka. And now it is the sea food industry," Nambiar added.

Exporters like Nambiar point out that the high labour cost in Kerala which is the highest in the country, is another serious reason why seafood exporters are running away to other states.

The minimum wage for peeling shed workers in Kerala is Rs 2,050 per month, while it is only Rs 1,650 in Orissa and Rs 1,550 in Gujarat.

Business news

Kerala