Even those who have never tasted sushi or sashimi are aware of the Japanese penchant for seafood. But in the wake of the devastating earthquake and tsunami that wiped out much of Japan's fishing community and infrastructure, the island is struggling to ensure adequate, radiation-free supplies of seafood, both for domestic consumption and exports.
Opportunity for India, right? Not for the moment. A sluggish government policy in India towards seafood imports and exports prevents it from filling even a part of the gap. While a small country like Thailand has billion-dollar players, India's largest exporter, Falcon Marine Exports, boasts of just about Rs 300 crore in revenue. There are over 400 players, but only half a dozen have revenues in excess of Rs 200 crore.
Abraham J. Tharakan, Chairman, Amalgam Foods
Two decades ago India was second to China in seafood exports to Japan. But since then Thailand, Indonesia and Vietnam have become processing hubs. "Thailand's seafood exports have soared to $6 billion, Indonesia's is at $4 billion and Vietnam's is close to $3 billion. India continues to lag at $2 billion," says Abraham J. Tharakan, Chairman, Amalgam Foods. His firm is a major exporter to Japan with three joint ventures, and 60 per cent of its Rs 120-crore export revenue comes from exports to the island nation.
Despite global-standard plants and low labour costs, Tharakan says restrictive norms have discouraged foreign investment. Exporters estimate that foreign direct investment, or FDI, in the seafood sector over the last decade has been "minuscule compared to China, Thailand and Vietnam". Players say existing norms, such as the special import permit for any seafood or meat, are like nontariff barriers. Inspection of raw materials and ingredients by the Customs, port health authorities and the plant quarantine department causes delays of 30 to 40 days.
Even government insiders agree to an urgent need for reforms. "We need a liberal import policy to encourage value addition and re-exports," says a senior official with the Marine Product Export Development Authority, or MPEDA, on condition of anonymity. MPEDA is the nodal agency under the commerce ministry for regulation, development and promotion of marine product exports.
The first on the list of hurdles is the so-called 'sanitary import permit policy', which bars import of livestock products without sanitary permits. This covers raw inputs such as unprocessed seafood and ingredients used for value addition. Take breaded shrimps, for instance, which require imported bread crumbs and certain flavous and sauces. Marine product exporters worry such imports could get stuck, and that they could carry huge losses if, after signing contracts, permits are declined by authorities.
Other irritants are rigid inputoutput norms. Consider one example: squid imported from colder climates for value addition contains more oil than flesh, while that from warmer locations are the opposite, providing a better yield. To get over uncertainties in processed output from reasons such as these, Indian players are urging the government to evaluate value addition based on value rather than weight or quantity.
It is a typical case of too many cooks. The seafood industry is under the purview of six Central ministries and nine states. In contrast, most competing countries have a dedicated ministry for fisheries, in many cases headed by a Cabinet rank minister, such as in China and Thailand. In India, deep sea fishing and aquaculture come under the agriculture ministry, exports under commerce, processing units under food processing while the Indian Council of Agricultural Research oversees fishery institutes. Protection of the exclusive economic zone up to 200 nautical miles is the job of the Coast Guard, while coastal inland fishing up to 12 nautical miles comes under nine coastal states. Naturally, there is lack of coordination between ministries, which have no common policy.
This is shocking given the country's potential. India has arguably one of the largest seafood resources with its 8,129-km coastline, 2 million sq km of exclusive economic zone and 1.2 million hectare of brackish water bodies offering potential for development of fisheries.
A National Fisheries Development Board, or NFDB, was set up four years ago modelled on the National Dairy Development Board which brought about a 'white revolution' in the dairy business. But it has a long way to go. Says NFDB chief P. Krishnaiah: "The sector can prosper if states are more proactive in taking advantage of the resources and support provided by the board."
"The major point is that we are followers and not leaders," says Anwar Hashim, President of the Seafood Exporters' Association of India and Managing Director of Abad Fisheries, the oldest firm in this business dating back to 1931. Policy flip-flops and delays in decision making are also hurdles. Take the case of Vannamei shrimps. The government initially said Vannamei was an exotic species and should not be brought into Indian waters. Later it changed its stand. "We introduced it in 2007 after pilot projects in Andhra Pradesh. But by then the global market had been captured.
China is producing 1 million tonne annually and Thailand 600,000 tonne," says Hashim. "If you do it 10 years after China, you do not have anybody waiting for you." Frustration among exporters is compounded by changing equations in some markets. Raw materials once exported by India to Japan is now being shipped to units in China, Thailand, Indonesia and even Vietnam. "These countries are then doing value addition for re-export to Japan and the West," points out Amalgam's Tharakan. If India can manage to export 30 per cent of its present seafood exports in valueadded form, its $2-billion turnover will increase to $3 billion, he feels.
Already, people like Tara Ranjan Patnaik, chief of leading exporter Falcon Marine Exports, are looking out. "We have been in this since 1982 and could have been a Rs 1,000-crore firm by now." Falcon is now eyeing other areas for growth. "We have entered steel and real estate business as we see better growth prospects," says Patnaik. That perhaps is enough food for thought.