Seafood exporters to go on 3-day stir

Seafood Exporters' Association of India (SEAI) has announced that marine products export units would be closed down for three days starting on February 13.

This is as a token of protest against the recent amendment to the Income-Tax Act, covering the DEPB (duty entitlement passbook) income on exports turnover above Rs 10 crore into taxable income.

Anwar Hashim, president, Kerala region, SEAI, said with the amendment the industry has to bear a financial burden of Rs 400 crore, and it would sound the death knell for the fisheries and aquaculture sector.

He said SEAI would start an indefinite strike closing down of all the units in India if the issue is not settled amicably within a fortnight.

The DEPB rate of 10 per cent for the aquaculture sector between 1997 and 2002 had pushed up the aquaculture production to three times the earlier production level.

A reduction of the DEPB from 10 per cent to 5 per cent virtually stagnated the production levels from which this sector has not been able to recover.

The reasons for the stagnation were the very thin profit margins, low capacity utilisation and erosion in the global selling prices of over 30 per cent since 2000.

Hashim strongly condemned the government policy of encouraging exports through exemption of export profits from tax and framing of laws through section 80 HHC to implement the policy, as the government later interprets the same law for netting back the same exempt export profits as taxable after a period of eight years. So, he added, the industry has been forced to stop all purchases and production for three days starting on February 13.

In the latest amendment, it has been clarified that the DEPB earned on export turnover up to Rs 10 crore is treated as export income and is, therefore, eligible for 80 HHC. But in Kerala, of the 50 active marine exporters 23 are above Rs 10 crore turnover and accounting for over 90 per cent of the total Rs 1,080 crore state's exports.

According to him, the turnover of marine products from 1997-98 to 2003-04 would be roughly in the range of Rs 30,000 crore. At an average DEPB rate of 5 per cent, the DEPB availed of would work out to Rs 1,500 crore. At an average tax rate of 35 per cent, tax impact would work out to around Rs 500 crore. Assuming that about 20 per cent of exporters may get the relief through exemption, the total liability of the marine export industry would still be to the tune of Rs 400 crore.

Hashim said SEAI already had a dialogue with other export sectors, which too fall in the same tax net and would initiate joint action to sort out the issue. The marine export industry is in deep trouble on account of low fish catch from the sea after Tsunami and anti-dumping duty to the tune of 10.17 per cent imposed by the US commerce department.