Impact of High Tariffs on India’s Shrimp Exports to the U.S.
India’s shrimp exports to the U.S. are significantly threatened due to a 26 percent reciprocal tariff, raising the effective tariff barrier to 45 percent. This is expected to drastically reduce shipments to the U.S., which imports nearly 44 percent of India’s shrimp. Industry experts suggest exploring alternative markets while some economists indicate possible resilience in agricultural exports despite these tariffs.
India’s shrimp exports to the United States are facing severe challenges due to a significant increase in reciprocal tariffs, which now reach 26 percent. This rise is expected to elevate the effective tariff on Indian shrimp to approximately 45 percent, causing widespread concern within the domestic shrimp sector. Industry experts foresee that this increase could lead to a substantial decline in shrimp shipments to the U.S., where historically, the maximum tariff was around 8 percent.
Comparatively, India imposes a duty exceeding 33 percent on imported vannamei shrimp, the primary variety exported from its shores. In the fiscal year 2024, India reported global seafood exports worth around Rs 60,000 crore, with shrimp alone making up about Rs 50,000 crore. The United States accounted for nearly Rs 22,000 crore, constituting roughly 44 percent of India’s shrimp exports, securing its position as a crucial market.
Additionally, high reciprocal tariffs will significantly impact other major shrimp-exporting nations, including Ecuador with a 10 percent tariff, Vietnam at 46 percent, and Indonesia at 32 percent. With the U.S. market potentially becoming less feasible, Indian exporters may begin to divert their focus toward alternative markets such as China, Europe, and the Middle East, as stated by industry insiders.
Nitin Awasthi from InCred Equities highlighted the critical nature of this tariff increase, noting the potential shortages in U.S. supermarkets. He characterized the current situation as indicative of “short-term panic, long-term reset.”
Despite the grim outlook, prominent agricultural economist Ashok Gulati posits that India could sustain, or even boost, its agricultural exports to the U.S. in light of the tariffs being imposed on competing nations. He emphasized the importance of relative tariff rates, indicating that India’s 26 percent tariff puts it at an advantage compared to China’s 34 percent, and other nations facing steeper rates like Vietnam and Bangladesh.
Furthermore, Gulati emphasized seafood’s low share of overall U.S. food expenditure, suggesting that demand for Indian shrimp is unlikely to see a marked decline. A similar outlook applies to rice exports, where the new 26 percent tariff—up from 9 percent—will affect momentum, yet India maintains a competitive edge over other exporting nations like Vietnam and Thailand.
Vijay Sethia, former president of the All India Rice Exporters Association, acknowledged that while short-term setbacks are expected, India’s exports are likely to stabilize in the long term, asserting that ultimately, the duty hike may adversely affect American consumers.
In conclusion, India’s shrimp exports to the United States face significant hurdles due to escalating tariffs, potentially leading to a drastic reduction in shipments. While the immediate outlook appears daunting, experts suggest that India’s relative tariff advantage against competing nations may help maintain its export levels. Furthermore, the long-term consequences of these tariffs are likely to influence both Indian exporters and U.S. consumers, ultimately reshaping the agricultural trade landscape.
Original Source: www.business-standard.com
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