Govt likely to withdraw export incentives for marine sector

The Central government may withdraw export incentives given to the marine products industry. As part of this, the Ministry of Commerce, under which the marine export industry falls, has chalked out a scheme either to withdraw the benefits fully or to reduce them in phases.

A directive from the finance ministry to various departments suggests to withdraw the additional benefits extended during the last couple of years to various export industries. The finance ministry has proposed to withdraw these benefits for those export sectors which performed better in 2009-10. Accordingly, the marine export sector falls under this category as the total export in last financial year crossed $2 billion.

The marine export sector at present enjoys a benefit of 5 per cent entitlement rate for shipment under duty drawback scheme as an incentive under Vishesh Krishi and Gram Udyog Yojana (VKGUY). The industry also gets a benefit of 8 per cent on the total value of exports under the Duty Entitlement Passbook Scheme (DEPB).

The ministry is now mulling to withdraw the incentive under VKGUY and to reduce the benefit under DEPB scheme.

India exported 663,603 tonnes of seafood, valued at Rs 9,921.46 crore in 2009-10 as against 602,835 tonnes valued at Rs 8,607.94 crore in 2008-09, recording a growth of 10.08 per cent in volume and 15.26 per cent in rupee value. Anwar Hashim, president, Seafood Exporters Association of India (SEAI) said the withdrawal of benefits would impact the sector and the marine industry of the country badly. The improvement in exports during the last couple of years might roll back this year. It is because of these incentives the industry could perform better in the last year.

Because of the latest economic turmoil in Europe, India’s exports are facing serious set back in the current year and devaluation of the euro had made the situation more worse. So currently exports to the Europe, the largest market of Indian seafoods is in rough weather. The US market is almost stagnant due to economic recession and anti-dumping duty.

EU had imported 163,666 tonnes of seafood items valued at Rs 2993.10 crore during the last financial year.

He also said that the increase in diesel prices had caused a steep rise in the cost of fishing. A fishing boat requires diesel worth Rs 60,000 on an average for each voyage, earlier. Now it has increased by Rs 5,000-7,000, making this sector on the verge of a closure. He added that because of the incentives, export houses could procure fish and shrimp at high prices. If this is withdrawn, the industry will be in deep trouble leading to serious crisis in the fishing sector.