Kerala's seafood sector's estimated annual turnover is around Rs 1,500 crore and the exit will cost the state dear, trading circles opined. The migration of seafood processing units is a second major blow to the state after the cashew growers' recent desertion that threw several workers out of job.

The catalyst that sparked the seafood units' exodus was Kerala's decision to go in for legal measures to recover the remaining part of the one per cent cess imposed on seafood exporters turnover. The cess was to build a corpus fund for fishermen's welfare fund, a fund intended to provide aid tothe traditional fisherfolk in Kerala.

According to officials of the Seafood Exporters' Association of India (SEAI), of the 120-odd seafood processing units in Kerala, already three have migrated to nearby Karnataka and have been approved by the European Union. Another seven units shifted to Vizag followed by three to Nellore and another two to Orissa. A couple of others are waiting on the wings to take the plunge, sources said. The state government and the seafood industry have been at odds over the way the cess has been collected ever since it was slapped.

The seafood exporters are opposed to the cess being levied only on them sparing other parties involved in the trade. Industry sources have pointed out that if the government slaps a levy to the tune of 0.09 per cent evenly on all players, then the required fund for the welfare fund could be mopped up. However, the government refused to budge and was going ahead with invoking revenue recovery measures, sources pointed out.

``This is robbing Peter topay Paul. Only one segment of the industry has to bear the brunt while others are being spared,'' the source said. If the burden of the cess is spread evenly on all players like peeling shed owners, boat owners and auctioneers, the required amount could be mopped up without squeezing any particular segment, he added. The export sector is using only 40-50 per cent of the total catch in Kerala, the rest being consumed domestically. Therefore there was a case for spreading the cess on turnover evenly on all players, he argued.

The industry has been already hit hard by scarcity in raw material and high wages. Kerala has around 124 seafood processing plant of which around 38 have got the Export Inspection Agency's clearance to export to European Union.

However, the capacity utilisation of these units is abysmally low with most of the units utilising only 14 per cent of the installed capacity. ``Even this is being made possible by importing around 40 per cent of the total raw materials from outside Kerala,''the source clarified.

Following the ban on aquaculture, the share of Kerala in the total Indian exports declined drastically over the years. From nearly 35 per cent a couple of years ago, it was 17 per cent now, the source said. The seafood exports from Kerala in absolute terms have declined to 61,000 tonnes last fiscal from 89,000 tonnes in the previous fiscal, he pointed out.

To top it all, the average wage rates prevailing in Kerala are much higher compared to other parts of the country. While the minimum wages for peeling shed workers in Kerala is Rs 2,050 per month, it is only Rs 1,650 in Orissa and Rs 1,550 in Gujarat. ``In the wake of dwindling resources, this itself is a sufficient reason for the industry to migrate to places with more resources,'' the official said. The cess issue has reached a flash point with the state government threatening to take revenue recovery measures against erring exporters. The exporters have already made their mind public saying that in these bad times they preferrevenue recovery than paying up the cess.

Though the state government has called a meeting to resolve the problem on July 19, it is unlikely to resolve the issue.