Seafood is one of India's largest agricultural exports after basmati rice and buffalo meat.
Even though high reciprocal tariffs levied in the US by the Donald Trump Administration are likely to put a dent on exports of some Indian agricultural products, such as shrimps, going forward, several experts say the fact that the tariffs are still lower as compared to many of India's competitors might signal that all is not lost.
India exported around $1.9 billion worth of seafood to the US in the financial year 2023-24 (FY24).
Bulk of India's seafood exports to the US is in the form of “Vannamei Shrimp”, and some estimates said that in FY24, almost 41 per cent of India's shrimp exports went to America, which was by far one of its largest markets.
Till now, the maximum tariff imposed by the US on shrimp exported from India was around 8 per cent, which, following the new tariff of 27 per cent, could go up to 45 per cent after adding countervailing duty (CVD), etc, trade sources said.
Seafood is one of India's largest agricultural exports after basmati rice and buffalo meat.
Among other agricultural items that are exported in a big way, basmati rice is a prominent one and the US buys around 300,000-350,000 tonnes of the rice variety from India every year.
Other items, such as oilseeds, castor oil, processed fruits, spices, and cashew, could also see a drop in exports because of high prices and shift towards Brazil whose tariff is relatively lower than India. But when it came to seafood and basmati rice, experts didn't foresee any long-term negative impact of the tariffs.
“Instead of a negative impact, I see a small positive impact on Indian seafood and basmati exports to the US due to the tariff change," NITI Aayog Member Ramesh Chand told Business Standard.
A similar fate also awaited agro-chemicals exports from India to the US.
In FY24, as per industry estimates, India exported around $5.5 billion worth of agro-chemicals globally, of which the US alone accounted for $1.1 billion (around 20 per cent).
Here, too, industry experts said that the duty differential between India (6 per cent) and China (24 per cent) has got further distorted after the tariff hikes, which has made Indian products even cheaper despite being slightly higher priced compared to Chinese products.
“Even if the manufacturing cost of Indian agro-chemicals is higher than China, the tariff difference nullifies that,” Dr Kalyan Goswami, director general of Agro Chem Federation of India, said.
Chand was of the view that when it came to seafood exports, major Indian competitors include countries such as Thailand, Vietnam, and Indonesia, and the tariff hikes in those countries have been much more than India.
“So, it is not that in the short run, the US will sharply produce seafood and even if they want to build their domestic capacities, it will take time. These new tariffs would make the products costlier for US consumers, which could lead to some dampening effect on demand, but it will be temporary,” Chand said.
But seafood industry players reacted negatively to the news of the tariff hike, with shares of most major listed companies falling sharply.
India, experts said, might now start looking at markets such as China, Europe, and West Asia for its shrimp exports.
“There could be significant impact of such high tariffs on the shrimp market in the US, and supermarkets might run dry of shrimps. But once US grocery stores run low, shrimp prices will adjust,” Nitin Awasthi of InCred Equities told Business Standard.
He said that there could be short-term panic, long-term reset! “Let's see how this plays out,” Awasthi said.
“In case of basmati rice, I feel that impact could be for two-three months and things could normalise after that,” said Vijay Sethia, a former president of the All India Rice Exporters Association.
Feature Presentation: Rajesh Alva/Rediff.com
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