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India's shrimp export volumes are expected to decline by 15-18 per cent in the current fiscal year following a sharp hike in US tariffs, which will take the total import duty to 58.26 per cent, effective August 27, according to a report by Crisil Ratings.
The rating agency said that the move will also hit realisations, even as Indian exporters attempt to shift their product mix and explore alternative markets. The reciprocal tariff imposed by the US stands at 50 per cent, but for shrimp exports, a countervailing duty of 5.77 per cent and an anti-dumping duty of 2.49 per cent were already in place before the recent tariff announcements took effect. Export revenues, which have remained flat over the past four years, are now projected to decline 18-20 per cent year-on-year, despite a temporary surge in shipments during the first quarter as exporters rushed to fulfil orders ahead of the tariff hike. In FY25, India exported around USD 5 billion worth of shrimps, with the US accounting for nearly 48 per cent of this. With exporters unable to pass on the increased cost to customers, operating profit margins are likely to shrink by 150-200 basis points. This double blow of falling revenues and compressed margins will weaken debt protection metrics and put pressure on the credit profiles of exporters. An analysis of 63 rated shrimp exporters--representing about 55 per cent of the industry's revenues--reflects this trend, the rating agency added. The US has traditionally been a top export destination for Indian shrimp due to its favourable market conditions, repeat buyers, and better profit margins. Even with existing anti-dumping and countervailing duties, as well as a 10 per cent reciprocal tariff introduced in April 2025, exporters continued to supply to the US, as buyers absorbed part of the cost. However, the steep hike in duties now places India at a major competitive disadvantage compared to countries like Ecuador, Vietnam, Indonesia, and Thailand, which face significantly lower tariffs. The report further added that the falling business volume will also cause the operating margin to plunge to its decadal low of 5.0-5.5 per cent this fiscal. This will be due to three reasons: the impact of the tariff plus levies, lower capacity utilisation resulting from a loss of revenue, and shrinking sales of value-added and large shrimps, which were mostly exported to the US and generated higher revenues and margins. (ANI)
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