Exports of all perishable products from Mumbai have come to a complete standstill as exporters have gone on an indefinite strike demanding the reversal of cess imposed during the recent war in Afghanistan and Iraq.
Exporters of others products, with the exception of newspapers, too have joined in to protest against the continuation of the wartime surcharges on the exporters.
Perishable food products' exporters are also protesting an additional cess for cold storage handling that has been imposed by the government. This excess tax burden has resulted in their freight charges being pushed up by nearly 25 per cent.
"War-time surcharges which were imposed when the Afghanistan war started have still not been withdrawn. In addition to that, a number of other surcharges have been continuously imposed in the last few months," says Parvez Quereshi, acting general secretary of the All India Meat and Livestock Exporters' Association.
The strike is estimated to cost losses of Rs 2 crore (Rs 20 million) everyday and about Rs 30 lakh (Rs 3 million) to airlines handling perishable cargo.
For instance, during the times of the ongoing war in Afghanistan and Iraq, the government had imposed a wartime cess of Rs 3 per kg for products to SAARC (South Asian Association for Regional Co-operation) countries, and Rs 5 per kg for exports to the Middle East.
A fuel surcharge of Rs 2.25 per kg too was imposed in anticipation of fluctuations in international oil prices.
"Much of that fluctuation never happened, yet the charges stayed on," complains Quereshi.
All of these wartime surcharges have not yet been withdrawn.
Recently, to handle international perishable cargo, the government had built a cold-controlled chain at the airport. The building of this chain was financed by the Agriculture and Processed Food Products Export Development Authority (Apeda) and run by the Airports Authority of India.
The chain which cost Rs 15 crore (Rs 150 million), was built with funds raised from the exporters themselves.
A tax of 0.5 per cent on the value of all exported goods was levied on every exporter.
That has yet to be withdrawn.
Worse, allege exporters, the government has imposed additional charges of Rs 4 per kg for utilisation of the cold chain terminal.
"Certain airlines like Emirates charge Rs 1.50 per kg to handle cargo through the cold chain terminal and we pay the AAI 65 paise per kg as utilisation charges. So we think that the Rs 4 per kg additional levy is unfair," says Quereshi.
As a result, since Monday, September 22, all exporters from Mumbai decided to go on a strike.
They are demanding that the government withdraw the wartime cess and clarify the position on the cold chain tax by either removing the 0.5 per cent tax on all exported goods or removing the Rs 4 per kg additional tax.
"We hope that the government will understand our position and look into this matter. Else we will continue with the strike," says Quereshi.