India's shrimp exports stare at steep decline amid US tariffs, upending lives of crores

Hyderabad: India's shrimp export industry is bracing for a dramatic downturn as the United States imposed a crushing 50% tariff effective August 27, prompting projections of a 15-18% volume decline this fiscal year, according to a new Crisil report.

The 50% tariff imposed by the the United States along with countervailing duty (CVD) and anti-dumping duties, Indian exporters are now burdened with nearly 65% levies.

The tariff increase threatens to devastate the livelihoods of 2.8 crore people across India, particularly in Andhra Pradesh, who depend on the seafood sector. This includes fishermen, aquaculture farmers, processing workers, packaging staff, and transporters whose economic survival is tied to shrimp exports.

The lower revenues, coupled with exporters' inability to pass the tariff burden to customers, will erode operating profit margins by 150-200 basis points, the Crisil report revealed Friday. This combination of reduced revenues and compressed margins will weaken debt protection metrics and put pressure on credit profiles across the industry.

Responding to the crisis, the Seafood Exporters Association of India (SEAI) has recently submitted a comprehensive memorandum to Union Finance Minister Nirmala Sitharaman, outlining urgent relief measures such as soft loans up to 30% of working capital at concessional interest rates below 5%, extension of export credit facilities to 240 days for all seafood exporters, financial assistance equivalent to 8% of FOB value for US exports, additional support at 2% of FOB value for exports to other countries, special financial packages for small and medium aquaculture farmers to prevent distress.

Andhra Pradesh Chambers President Potluri Bhaskar Rao has called for the union government to establish a high-powered committee with stakeholders to address issues on a daily basis, along with duty drawbacks and freight subsidies to offset tariff costs.

The US has historically been India's most lucrative shrimp market, accounting for 3,11,948 metric tonnes in 2024-25, followed by China at 1,36,164 metric tonnes, according to the Marine Products Export Development Authority (MPEDA). The American market has remained attractive despite previous anti-dumping and countervailing duties, and even after a 10% reciprocal tariff imposed in April 2025, because customers absorbed portions of the additional costs.

However, the dramatic increase to over 50% tariffs puts India at a severe competitive disadvantage against Ecuador, Vietnam, Indonesia, and Thailand, most of which face tariffs less than half of India's rate. This disparity threatens to make Indian shrimp exports to the US economically unviable for the remainder of this fiscal year.

India's overall seafood export performance in 2024-25 reached 16,98,170 metric tonnes valued at ₹62,408.45 crore (US$ 7.45 billion), with frozen shrimp maintaining its dominance as the top exported item by both quantity and value at 44% of total exports. The export portfolio also includes frozen fish (20%), frozen squid, frozen cuttlefish, chilled items, and live seafood.

State-wise export data shows Andhra Pradesh leading with US$ 2,536.77 million in export value, followed by Tamil Nadu (US$ 840.11 million) and Kerala (US$ 829.42 million). Gujarat ranked fifth with US$ 702.75 million, while West Bengal and Telangana contributed US$ 518.71 million and US$ 73.44 million respectively.

Among Indian ports, Visakhapatnam dominated with 31.52% of the country's seafood exports, followed by Navi Mumbai's JNPT (10.81%) and Kochi (9.70%). Chennai and Kolkata rounded out the top five with 7.75% and 7.49% respectively.

Operating margins are expected to plummet to a decadal low of 5.0-5.5% this fiscal year due to three critical factors, the impact of tariffs plus levies, lower capacity utilization resulting from revenue losses, and reduced sales of value-added and large shrimps that were primarily exported to the US and commanded premium prices.

Crisil Ratings Senior Director Rahul Guha warned that the challenges will discourage farmers from continuing investments in shrimp culture. "Farmers face substantial upfront costs for land lease, seed, and feed, plus significant investments in aeration equipment, electricity, pond management, and biosecurity measures that have substantially increased production costs. The mounting risks of diseases, reduced harvests, and unprofitable global prices were already pushing farmers toward alternative cultures requiring lower investments and carrying limited risks. "This process will accelerate due to the tariff impact. Consequently, diversification of exports and increasing domestic consumption will be crucial for the long-term viability of shrimp farming," Guha said.

Despite the setbacks, Indian shrimp exporters retain certain competitive advantages, including evolved domestic infrastructure and established distribution networks in the US. Since production capacity in competing countries is not expected to rise substantially in the near term, Indian processors may find opportunities by redirecting exports to alternative markets.

The potential India-UK free trade agreement could provide preferential access to British markets, while existing relationships with China and Russia offer additional diversification opportunities that could partially offset volume losses in the second half of this fiscal year.