Gujarat fishmeal makers join nationwide strike against GST

There are around 25 sterilisation plants in Gujarat which manufacture fishmeal and fish oil. All of them are located on Saurashtra coast of the state. The decision by the fishmeal producers of Gujarat comes a couple of days after Sait held a meeting with them in Veraval town in Gir Somnath district on Friday. Fishmeal producers in other states have been on indefinite strike since the beginning of this month, demanding roll back of five per cent GST levy on fishmeal used in preparing acqua-feed. Before GST was introduced in India in July 2017, fishmeal was not a taxable item. The government initially proposed to levy five per cent GST on this product only to declare it non-taxable later on. However, on December 31 last year, the Union Finance Ministry issued a circular, clarifying that GST was applicable on fishmeal also and Sait said that some units received notices demanding the tax with retrospective effect.

“We are already paying 12 per cent GST on fish oil and five per cent GST on fishmeal which is used in manufacturing of fertiliser. We have objected to this levy. But fishmeal is also used as the main ingredient in preparations of aqua-feed which is required in shrimp farming. Thus, fishmeal meant for aqua-feed is an agricultural-oriented product and hence non-taxable,” Sait further said.

The AIFMOMMA secretary said that the 70 units of the country annually produce around 3.5 lakh metric tonnes of fishmeal – a dry powder-like concentration of fish protein which is manufactured from trash fish not fit for human consumption or such fish type which has limited consumer preference. It is obtained from fish waste generated by fish cutting and surimi plants. Sardine fish, which is very small in size and commonly referred to as by-catch, forms the main raw material of fishmeal. Sait said that fishmeal production is a Rs 17,000-crore industry, directly employing around 6,000 people and many more thousands indirectly. Fishmeal is indispensable in preparation of aqua-feed, which is critical for shrimp farming. India has been the world’s top exporter of shrimps for the last three years. Fishmeal is also used in manufacturing of cattle feed and poultry feed.

“Our product was never taxable. Nor did tax officers raised any tax demand till recently and therefore we never collected it from our customers. Now, the government wants us to pay taxes with retrospective effect. Our industry cannot bear this burden of retrospective taxes. Therefore, we have no option but to protest this decision of the government,” said Kiran Chudasama, vice-president of Gujarat chapter of AIFMOMMA.

Ismail Thait, president of Veraval Industrial Association and owner of a fishmeal production unit, said that the industry was indirectly supporting the fishing industry. “Earlier, fishmeal was produced by the traditional method of sun-drying fish and then grinding it. But now, there is ever decreasing space for fish drying on Gujarat coast. In such times, sterilisation plants, which process wet fish and fish waste into fishmeal, are keeping the industry going,” he said, adding that plants in Gujarat are processing average 2.5 lakh metric tonnes of trash fish annually.

Incidentally, manufacturers and traders of cotton seeds de-oiled cake, which is used as a cattle feed, also protested against levy of five per cent GST on their product in 2017. But the government had not budged from its position and the cakes still attract GST.

Gujarat with more than 1,600-km long coastline is a major fish exporting state. Sait said that fishermen and shrimp farmers will also be affected by the standoff. “Earlier, by-catch was of little importance to fishermen. But since fishmeal production industry was established in India in 1996, fishermen have started getting good price for their by-catch also which help them cover the cost of fishing trips while their main catch, which is fit for human consumption, earns them profit. Also, we are processing waste generated by fish cutting in surimi plants into valuable product and thus taking care of waste which otherwise would have been a liability. On the other hand, fishmeal imports are very costly,” he said, adding around 100 kg of by-catch of fish waste is needed for producing 20 kg of fishmeal.

Interestingly, aqua-feed, which is prepared by using fishmeal is tax-free.

Sait said that they are planning to make a representation to Prime Minister Narendra Modi over the issue. “We had made representations to then finance ministers Arun Jaitley and Piyush Goyal and then commerce minister Nirmala Sitharaman early this year. They had assured to look into our demand. But due to Parliamentary election, things did not move. Now, we are planning to meet the Prime Minister and make a representation. We are hopeful that the issue will get resolved at the meeting of GST Council scheduled next month,” the AIFMOMMA national secretary said, adding they were to meet Gujarat Finance Minister Nitin Patel on Tuesday.