A group of wholesale distributors in the state are planning to shift base to Gujarat seeking better business prospects after getting positive feelers from Gujarat chief minister Narendra Modi and state industries department.

Nearly 20 wholesale distributors out of the total of 240 wholesalers in the state who had downed their shutters during the last two years due to alleged unscientific VAT ( Value Added Tax) collection in the state, will leave for Ahmedabad on November 9 to hold talks with ministers and officials in Gujarat. A team of wholesale distributors had already visited Gujarat last month and submitted a positive report.

Twenty wholesale distributors had formed 'Marketing and Distributing Company of Keralites' with a capital of Rs 5 crore by pooling Rs 25 lakh each and plan to start wholesale distribution in Gujarat.

Company chairman C E Chakkunny who has been active in the field for five decades said it has become impossible to trade in Kerala due to the adverse business climate including 14.5% VAT levied on many products.

He said the wholesale distributors had been paying annual tax returns of 4% after VAT was implemented in the state in 2005. "We were shocked to receive a notice from the state government stating that we had to pay VAT of 12.5% along with 17% fine besides collection charges, with retrospective effect. The tax department has been harassing us by sealing our offices and freezing our bank accounts, leaving us with no option but to migrate to other states, he said.

"When compared to Kerala, Gujarat has much less tax rates. For many items which attract tax of 14.5% in the state, it is just 5% in Gujarat," he said.