Gujarat loses Rs 20 crore as seafood firms go on strike

Huge direct and indirect losses to the tune of Rs 20 crore were reported in the seafood trade, as business activity on the coastal belt of the Saurashtra region was severely affected owing to a three-day strike by seafood exporters across the nation.

The strike to oppose Income-Tax department's recovery of licence of sale acquired under Duty Entitlement Pass Book (DEPB) scheme was called off on Wednesday.

"Direct and indirect losses due to the strike are estimated at Rs 20 crore," said a Veraval seafood exporter Kenny Thomas, who is president, Gujarat region, Seafood Exporters' Association of India (SEAI).

Annual business volume worth Rs 800 crore is generated from seafood exports of the Gujarat region business cycle. As the cycle comprises 250 days of a year, per day business works out to Rs 3.2 crore. Owing to the strike, the trade registered a direct loss of Rs 11 crore, and with allied activities the amount comes to Rs 20 crore, Thomas added.

Seafood exporters avail of DEPB licence on export proceeds of seafood products. The licence entitles them to a percentage of benefits on duty structure for the imports made by them, if any.

"It's a kind of credit we get in the form of a licence. However, a few of our traders are not involved in imports and so they sell the DEPB licence to the people who wish to avail of duty benefits on exports done by them, it's a kind of credit sale," said Jagdish Lodhari, vice-president of SEAI Gujarat region, who exports seafood products from Porbandar.

"Since we don't pay income tax on exports, we used to avail of tax benefits on income earned vide sale of the DEPB licence against 80 HFC provision of I-T Act. Of these proceeds, the I-T department is now asking recovery, so we went on strike to protest its demand," he added.

The I-T department is insisting on recovery effective from 1998 and excepts the exporters to pay the money back after they had passed on the benefits to their customers or contractors, Thomas said.

Seafood exports from India are facing stiff competition from China. Despite Gujarat having a rich marine belt on its coast, the trade here is seeing a downturn now.

"Turnover of seafood exports fell to Rs 6,500 crore nationally, of which Gujarat's share is Rs 800 crore, which is hardly 12.5-13 per cent. Despite having a rich marine belt, we today rank fourth," Thomas said. Andhra Pradesh is the No. 1, followed by Kerala at the second slot and Tamil Nadu the third, he added.

The I-T department is targeting to recover around Rs 400 crore from seafood exporters across the nation; of which it expects to collect Rs 55 crore from Gujarat.

While the seafood exporters have approached the court demanding justice, they are a worried lot anticipating harassment from I-T officials.