The Indian seafood industry is facing a significant challenge following the imposition of steep tariffs by the United States, a key export market. These tariffs, reportedly around 50%, have severely impacted the price competitiveness of Indian seafood products, particularly shrimp, threatening the livelihoods of millions involved in the sector. As a result, India is actively pursuing a strategy of market diversification, exploring new opportunities in the UK, the EU, Japan, China, Korea, and West Asia.
The US has historically been a major importer of Indian seafood, with exports reaching $1.9 billion in the previous year, representing 32% of India's global seafood sales. However, the recent tariff hike has led to concerns about contract cancellations and shipment delays, prompting Indian exporters to seek alternative markets. The Seafood Exporters Association of India (SEAI) has warned that shrimp exports worth $2 billion are at risk due to the tariff increase.
In response to this setback, the Indian government and industry stakeholders are taking a multi-pronged approach to mitigate the impact and sustain the growth of the seafood sector. A key focus is on market diversification, with the UK emerging as a promising alternative. The India-UK Free Trade Agreement (FTA), which offers duty-free access for fisheries products, is expected to boost seafood exports to the UK, potentially offsetting some of the losses in the US market. The Compound Livestock Feed Manufacturers Association (CLFMA) of India anticipates a threefold increase in seafood exports to the UK.
Besides the UK, the Indian government is also actively exploring opportunities in other regions, including the EU, Japan, China, Korea, and West Asia. These markets offer significant potential for Indian seafood exports, and the government is working to facilitate access through trade negotiations and promotional activities.
In addition to market diversification, the Indian seafood industry is also focusing on product diversification and value addition. There is a growing emphasis on shifting towards species like Black Tiger shrimp to cater to niche markets. Furthermore, there is a push towards producing more value-added products such as cooked and breaded shrimp, which can leverage India's cost and capacity advantages.
The Indian government is also providing support to the seafood industry through various measures. The industry has urged the government to promote broader market diversification by facilitating access to regions such as East Asia, the Middle East, and Africa, and intensify trade diplomacy through platforms like the WTO and G20 to address unfair trade barriers. To cushion the impact on exporters, particularly MSMEs, there have been calls for reinstating and expanding the Interest Equalisation Scheme (IES) to ease credit costs. Calls have also been made to recalibrate export incentive schemes like RoDTEP to provide higher WTO-compliant rebates to affected sectors. The SEAI has approached the finance ministry seeking emergency financial assistance, including a 30% increase in working capital through soft loans with interest subvention, and a moratorium on pre- and post-packaging operations.
The current crisis has highlighted the vulnerability of the Indian seafood industry to trade barriers and the need for a more diversified and resilient export strategy. By proactively exploring new markets, diversifying product offerings, and enhancing value addition, the Indian seafood industry aims to overcome the challenges posed by the US tariffs and maintain its position as a major player in the global seafood market. The industry is also urging the government to address unfair trade barriers through diplomatic channels and provide financial support to help exporters navigate this difficult period.
