The expatriate from Kerala is a leading player in the import and export of fresh vegetables in the country and a prominent figure in the Jeddah central vegetable market.
The trader is likely to be deported and slapped with an entry ban into the country and the Gulf Cooperation Council (GCC) countries, the Arab News reported without naming him.
The arrest comes close on the heels of a Saudisation (nationalisation) drive in the country and efforts to curb undercover businesses run by expatriate workers.
The arrest was overseen by a committee comprising the ministries of commerce, labour, municipal affairs in coordination with the police and representatives of the governor's office responsible for monitoring the mandatory nationalisation of the vegetable market.
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A large number of youth were reportedly working with the man as merely a cover-up. He was the main authority dictating the business and influencing price fluctuation of fresh produce, the report said.
The paper, quoting sources said that amid intensified inspections, vegetable prices were stable now but it was hard to say how long they would remain so.
Besides the Indian trader who was apprehended, there are also a number of other Indian, Bangladeshi, Yemeni and Pakistani expats, who run a flourishing business trading in vegetables.