Business Find/Feedback/Site Index
February 4, 2000

BUDGET 1999-2000

The Rediff Business Interview/Elias Sait

'Govt can help the seafood sector to emerge as the biggest forex earner'

The Rs 50 billion marine food industry -- one of the largest net foreign exchange earners in the country -- is in doldrums, thanks to a plethora of problems. The Supreme Court order that virtually banned shrimp farming in wastelands, the fall in fish landings, the perennially pending aquaculture legislation and stringent quality norms imposed by importing countries in the European Union and the United States have devastated the seafood industry across the country.

Seafood products -- in which India has tremendous growth potential -- continue to be neglected by the government. A number of small-scale fish farming entrepreneurs have shut down their businesses, mainly because export orders for marine products have drastically come down in the last three years. Also, some state governments have started levying one per cent cess on the industry.

Email this interview to a friend The apex Seafood Exporters Association of India has made a number of representations to the central government pleading for an immediate, new aquaculture policy to rescue the marine food industry. The SEAI estimates that in the last three decades, the marine food industry must have contributed at least Rs 400 billion to the country through exports. Yet, the government continues to ignore the woes of millions of coastal workers who have been thrown out of jobs and thousands of small entrepreneurs who have shut down their businesses.

Therefore, as the budget day approaches, the Madras-based SEAI is pressing for a host of new incentives which its president Elias Sait says can “rescue the industry from imminent death”. In an interview with George Iype, Sait explains the crisis that has engulfed the marine food industry in the country.

The marine food sector is ignored by the government though it is one of the largest foreign exchange earners in the country. Why?

There are many reasons why the marine food industry is in such a bad shape today. For the last three-four years, the coastal economy of the country has been terribly affected due to the declining exports of seafood products. But the government prefers to ignore our problems for reasons best known to it. The culprits in the government are the ministries of commerce and agriculture which have done absolutely nothing for the seafood industry in the last many years.

Three years ago, you had set an export target of US $ 3 billion. But today the seafood industry is nowhere near the target.

Yes, we had made an honest assessment that the seafood industry could attain an export target of US $ 3 billion by the year 2000. But that could not be due to a number of reasons. First came the Supreme Court order that considered the aquaculture industry as polluting and therefore an environmental enemy.

So according to the order, only ten per cent of the wastelands can now be used for shrimp farming. I do not want to question the Supreme Court order. But I would like to demand that if more land area is not permitted for the aquaculture industry, it will die sooner than later.

Then the quality norms stipulated by the European Union virtually forced many fish exporters to shut their shop. The EU accounts for nearly 25 per cent of our total exports. But the industry withstood the EU pressure and spent at least Rs 20 million on modernisation to ensure that exports to those countries continue. But even now only 70 seafood processing units in the country are permitted to export to the EU.

But sadly, during all our crises, the government never made any rescue attempts. The result is that seafood exports have been stagnating. In 1998, the exports were just US $ 1.3 billion. They came down to US $ 1.1 billion last year.

Have the seafood exports to countries other than the EU been affected?

While it was the strict quality norm that endangered exports to European countries, our exports to the United States and China have also been considerably affected.

The issue in the US is over the turtle excluder devise.

In fact, if the South East Asian economic crisis has affected any sector in India, it is the seafood industry.

The Japanese companies have slashed our seafood prices by 30 to 40 per cent making many of our processing units redundant and loss-making.

The real danger signals have come from China. China used to be a mass market for products like ribbon fish that were exported especially from the Indian west coastal states like Gujarat and Maharasthra. The Chinese imports consisted of nearly 40 per cent of our exports.

But last year, the Chinese government tightened the regulations and reduced the Indian import to 20 per cent. It has immediately thrown into doldrums many fish processing factories in the west coast as business with China which consisted of Rs 7 billion, came down.

What is more worrying is that many of our processing units have to recover nearly Rs 900 million from China. We have approached the government to help us retrieve this money from China.

Has this shrinking affected life in the coastal states in the country?

It has devastated life in the coastal areas. Thousands of people are being rendered jobless as more and more fish processing units close down. Many jetties are in a bad shape because the government has done little infrastructure development work in coastal areas. While countries across the world have modernised their jetties, our jetties are in a mess because no one cares for them.

Do you think passing the aquaculture bill in Parliament will solve the problems of the industry to a large extent?

A clear, broad policy on aquaculture is necessary for the survival of the industry and the growth of seafood exports.

For instance, shrimp accounts for more than 50 per cent of our aquaculture exports. But the landings of shrimp from the marine sector have been falling drastically over the years.

The Supreme Court verdict has been a death knell for the shrimp farming sector.

Therefore, we need a policy on aquaculture that should spell out clearly which lands can be utilised for aquafarming and how to improve the availability of the raw materials.

The marine sector needs to be regulated with proper checks and balances and this can be done only if a proper law is in place.

But over the last three years, successive governments have been declaring their intentions to pass the aquaculture bill in Parliament, but nothing has yet emerged. The political crisis at the Centre was partially responsible for the terrible delay in passing the bill for the last three years.

Now that we have a stable government, all we request Prime Minister Atal Bihari Vajpayee is to kindly bring in the legislation on aquaculture and save the marine food industry.

Have you made any representation to the government in this regard?

We have been making umpteen representations to the government all these years. Our utmost responsibility is not only to make representations to the government, but to expose those who -- especially the environmentalists and activists -- are campaigning against the aquaculture.

Recently, the government has constituted a working group to examine the issues related to financing the seafood industry. We want the government to announce a number of policy and financial packages for the starving seafood industry in the coming Union Budget.

What kind of incentives do you expect from the government?

The government can directly and indirectly help the seafood sector to emerge as the biggest foreign exchange earner for the country in many ways. The government is giving incentives and financial support to several other sectors. Why can’t the same thing be done to us too?

We need constant value addition from the government to improve our lot. When the ban from EU came, the government did not help us with any financing scheme to modernise our processing units. For financial institutions and banks, the seafood industry is a taboo.

Some of the state governments have imposed one per cent cess on seafood exports. The Centre can intervene and find a solution to the further burden imposed by the state governments.

We have asked the Indian Banks' Association to help us by charting out a financing programme for the modernisation of the processing units across the country. The government should also set up an independent expert agency to study the problems faced by the industry. The seafood industry can now be revived only if the government provides it the life-supporting system.

Cess-hit seafood companies shift from Kerala

Run-up to the Budget 2000-2001

Budget 1999-2000



Tell us what you think of this interview