Hit by the US tariff of 26%, India’s seafood exporters and farmers are analysing the impact of the new tariff regime by a country which has been their biggest export destination for the last many years.
Exporters say that the consignment already in transit would be exempted from the new import duty thus preventing financial losses for units and delay in delivery.
“The critical issue is that as a portion of seafood exports sent to south east Asian countries including Vietnam and Thailand where its re-exported to the US after value addition, higher tariff imposed on imports of these countries would have an impact on the trade,” KN Raghavan, secretary general, Seafood exporters association of India, told FE.
He said the imposition of tariff comes just at the beginning of the current season as farmers, processors and other stakeholders in the chain are about to start preparation for shrimp cultivation. There is also fear of losing a portion of the market to Ecuador, which is closer to the US geographically as well as attracting lesser import duty.
The seafood exports to the US was valued at $ 2.54 billion in FY24, out of India’s total exports of $ 7.38 billion. Frozen shrimp continue to be the principal item exported to the USA with a share of close to 92%.
Bulk of the country’s seafood exports to the US is ‘Vannamei Shrimp’, and in FY24, over 41% of India’s shrimp exports went to America, which was by far its largest market.
The reciprocal tariff of 26% also covers the major exporters to the US shrimp market, including Ecuador (10% ), Vietnam (46%) and Indonesia (32%).
Seafood is one of India’s largest agricultural exports after basmati rice and buffalo meat.
“While the shrimp industry would be impacted, the country’s poultry, dairy and aquaculture sectors may find opportunities to capitalize on shifting global trade dynamics as other countries face similar or higher tariffs,” Divya Kumar Gulati, chairman, compound livestock feed manufacturers association, said.
Meanwhile there are several discussions about India’s move to reduce its unusually high import duty on several agricultural products. Several agricultural products facing high tariff differentials include rice (70%), wheat (40%), food preparation (150% ), walnut (100%) dairy products- cheese and skimmed milk powder (30-60%), and cut chicken legs (100%),
“Any reduction in import duties on chicken legs should be considered after taking into consideration the domestic poultry industry,” Ricky Thapar, joint secretary, Poultry Federation of India, said. Officials said higher duty structure is aimed at protecting the growing domestic poultry industry which is witnessing around 8% growth annually in the last decade, from competitively priced American chicken legs.
Dairy industry sources said higher import duties on skimmed milk powder (SMP) as millions of farmers have an average herd size of 2 – 3 animals in India against an average herd size of 500 animals in major milk producing countries including USA, Australia and New Zealand, which reduces their cost of production.