India's shrimp exports to drop sharply due to US tariffs, alternative markets to offer support

New Delhi, Aug 29 (IANS) India's shrimp export volume is expected to drop by 15-18 per cent this fiscal as US tariffs on the sector increased to 58.26 per cent starting August 27, a report said on Friday.

The tariffs of 58.26 per cent includes 50 per cent reciprocal and penalty duties, along with existing anti-dumping and countervailing levies.

Indian processors will be able to support volume to some extent in the second half of this fiscal by diverting their shrimp exports to alternative markets such as the UK (due to the India-UK free trade agreement), China, and Russia, a report from Crisil Ratings said.

The rating agency called for diversification of exports and increasing domestic consumption in the long run to maintain the viability of shrimp farming.

Revenues, which were stagnant for the past four fiscals, however, will decline 18-20 per cent YoY this fiscal despite some cushion from a surge in shipments in the first quarter in anticipation of the tariff hike.

This is because the US accounted for 48 per cent of India's $5 billion prawn exports in fiscal 2025.

Realisations per unit of shrimp would fall, too, leading to exporters looking to change their product mix and scout for alternative export destinations, the report noted.

Indian shrimp exporters had favoured the US for its easy market access and high profit margins. Despite anti-dumping levies and the 10 per cent reciprocal tariff in April 2025, the appeal remained as buyers absorbed some per cent of tariffs.

However, the current 50 per cent tariffs put it at a disadvantage compared to Ecuador, Vietnam, Indonesia, and Thailand, which have tariffs under half that of India.

The lower revenues, coupled with the inability to pass on the tariff burden to customers, will erode the operating profit margin by 150-200 basis points to 5-5.5 per cent. This will in turn impact their debt metrics of exporters, eroding their credit profiles, the report noted.

Following the impact of US tariffs on India's textile sector, the government's support is expected to expand export markets through a dedicated outreach programme to 40 countries, as well as export incentives and interest subsidies, to improve the competitiveness and profitability of Indian textile exporters.

--IANS

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