In troubled waters: Trump’s tariffs threaten India’s shrimp lifeline

滨苍诲颈补’蝉 shrimp industry is currently facing significant uncertainty as it braces for a 26% reciprocal tariff imposed by the Donald Trump administration, set to take effect once the 90-day pause ends. Currently, the tariffs stand at 10%.

The US is the biggest market for Indian shrimp, accounting for nearly 41% of 滨苍诲颈补’蝉 total exports. In FY24, India exported 297,571 million tonnes (MT) of frozen shrimps valued at $4.8 billion to the US, according to the Marine Products Export Development Authority (MPEDA).

The “complete uncertainty” is hurting the sector, according to Pavan Kosaraju, CEO of AquaExchange, a Veeravalli (Andhra Pradesh)-based technology firm that provides aquaculture solutions. “When we speak of this tariff, who is going to bear this extra cost is the biggest question. Will the importers bear the price or will the end consumers bear it? In the shrimp sector here, it is mostly the latter. Some sectors divide these tariffs 50/50. India runs with a 26% local tariff; in addition to this, there is a 5.7% countervailing duty (CVD) and a 2.49% anti-dumping duty. This comes to a total of 34.19% now,” he said.

He further explained that even if only 26% is being split, Indian companies are expected to absorb the 13% extra cost, which is almost double the margins they currently earn. Such a scenario renders it unviable for processors to operate. This burden is subsequently passed on to farmers.

“Given the higher incidence of crop losses that we see in the market recently, the farmers are working with the same kind of margin, 10-15%. The moment you add a 13% tariff here, it becomes unviable for farming. We have also seen a few incidents where farming associations or regional farming groups take a crop holiday because of this,” he said.

Added Yogesh Gupta, MD of Kolkata-based shrimp processor Megaa Moda: “The Indian government should fight for this sector and try diplomatically to get rid of ADD/CVD and do hard negotiation on bilateral agreements. Other support like IES (Indian Export Standards), etc., will give temporary relief but is much needed now.”

He strongly advocated for the introduction of TMA (Transport and Marketing) assistance for this sector, citing the extremely high freight costs.

Currently, Indian shrimp exporters, according to Divya Kumar Gulati, Chairman of CLFMA (Compound Livestock Feed Manufacturers’ Association) of India, are now preparing to ship previously delayed orders. Industry officials are expressing relief that Indian shrimp has once again become competitive with other exporters such as Ecuador, following the 90-day pause, during which both India and Ecuador would face 10% tariffs. But once the pause ends, India will face 26% tariffs while Ecuador will continue with 10%. This disparity will pose challenges for Indian exporters operating on thin margins.

According to media reports citing Seafood Exporters Association of India Secretary General K.N. Raghavan, 滨苍诲颈补’蝉 seafood exporters are preparing to ship 35,000-40,000 tonnes of shrimp to the US, with orders remaining stable following the announcement of the 90-day tariff pause.

“Exporters feared that the higher tariffs would endanger thousands of containers, disrupt global supply chains, and force renegotiations with major US supermarket buyers, such as Walmart and Kroger. The pause allows exporters to fulfil existing contracts without incurring the additional tariff burden, stabilising orders in the short term. Nevertheless, the overall outlook remains cautious; the effective duty rate is still higher than before, and the sector is wary of further policy change. Exporters and farmers are incurring significant losses and facing uncertainty, with many farmers regretting recent investments in shrimp cultivation due to the sudden price drops and unstable demand,” Gulati said.


The Ecuadorian problem
Ecuador has been a long-standing competitor of India for shrimp production and exports. The South American country has received reciprocal tariffs of just 10% from the US, which intensifies the competition for 滨苍诲颈补’蝉 shrimp exports.

Kosaraju mentioned that the only advantage for Indian exporters at this moment is Ecuador’s insufficient infrastructure for value-added shrimp exports; the country currently engages only in basic processing of shrimps. Value-added shrimps include shrimps that have undergone various processing steps, such as having their heads or tails removed, being cooked or being peeled, to enhance their appeal.

“The US imports a lot of value-added products for which Ecuador lacks the necessary infrastructure to operate on a large scale; that is the only last ray of hope for the Indian industry today,” he said.
However, Ecuadorian shrimp processors are now developing the infrastructure to do value addition, Kosaraju says. “So, in about 18-24 months, we see that big shift happening…where it could take over the right infrastructure for value addition. Once that happens, it will be a big blow to the Indian industry,” he said.

Market diversification
Another step that could potentially enhance 滨苍诲颈补’蝉 shrimp exports is market diversification. For 滨苍诲颈补’蝉 shrimp exporters, reducing dependence on the US and exploring other favourable markets, such as China, Japan, and Korea, may serve as a long-term strategy.

This is something Indian exporters should have started some five years ago, as per Aditya Dash, MD, Ram’s Assorted Cold Storage Limited, a seafood processing/exports company of the Suryo Group of Companies. “They need to address non-tariff barrier regions like the European Union, China, Korea and Japan,” he said.

Kosaraju pointed out that apart from being one of the top exporters of shrimp, China is also a net importer and presents a significant market opportunity to explore once the US tariffs are set in. However, it comes with its own set of challenges. One is that China only requires shrimps for basic processing, and hence, profit margins are lower in China compared to the US.

The second challenge is that the quality testing and standards requirements by countries like Europe and Japan are far stricter compared to the US. “They have higher requirements on data traceability and various metrics; they also require higher sample testing and antibiotic trace testing. While these are also required for the US, only about 50% of the containers are tested for them, unlike in other countries,” he said.

Gulati pointed out that focusing on value-added products and adhering to EU standards can enhance exports to countries like Spain, France, and Italy, which are major shrimp importers within the EU.

This could also be a strategic time for India because China processes a lot of American seafood and then re-exports it, said Dash. “Alaskan prawns go to China, get reprocessed and then exported back to the US and around the world. The US can now start developing India as a partner for this. Similarly, Argentinian shrimps, we can import them to India, reprocess, and then export them back to the US. It’s feasible, because it will be a product of Argentina, which will have zero import duty,” he said, adding that this cannot be done overnight and requires a lot of policy support.

Important steps taken
According to Kosaraju, a small step forward has been made by shrimp feed manufacturers in Andhra Pradesh with the reduction of prices of shrimp feed (Rs 5 per kg). This comes out after a government consultation with the stakeholders. Andhra Pradesh is the leading shrimp-producing state in India. “If you want to produce 1 kg of shrimp, you need to require about 1.4 kg of feed. In this new scenario, your entire cost of production will come down by about Rs 5 per kg. This will provide some relief to about 3-4% for the overall cost of production,” he said.

CLFMA’s Gulati also said that exporters have reduced offer prices by approximately 10% since the tariffs were announced, as demand from US buyers weakened and renegotiations became common. For instance, the price of the 100-count Vannamei shrimp dropped from around Rs 240 to Rs 200 per kg, and similarly for others.

He emphasised the importance of the government’s taking strategic steps, such as reducing or eliminating import duties on essential inputs for shrimp farming, including feed, broodstock, and other necessary materials. This lowers production costs, making Indian shrimp more competitive in the global market. “Further, offering low-interest loans or moratoriums on existing loans can help shrimp farmers and exporters manage their cash,” he said.