MUMBAI: Shrimp exports are set to plunge by 15-18% this fiscal with the effective US tariffs rising to 58.26% (including the countervailing duty of 5.77% and anti-dumping duty of 2.49%) from August 27, leading to a 15-200 bps decline in profit margins, a report has warned.
The revenue of shrimp exporters, which was stagnant for the past four years, will decline 18-20% on-year this fiscal despite some cushion from a surge in shipments in the first quarter in anticipation of higher tariffs. In fiscal 2025, the country shipped out around $5 billion worth of shrimps, with the US accounting for around 48% of this, Crisil Ratings said Friday.
Lower revenue, coupled with the inability to pass on the tariff burden to customers, will erode the operating profit margin by 150-200 bps, the report said, based on an analysis of 63 shrimp exporters who account for 55% of the industry revenue, adding that the combination of lower revenue and subdued margins will weaken the debt protection metrics of players.
The US has long been a preferred destination for shrimp exports because of easy market access, higher growth prospects, better profit margins and consistent customer approvals. It continued to be a preferred destination despite anti-dumping and countervailing duties, and the recent reciprocal tariff of 10% in April 2025, as customers absorbed a portion of the tariff.
However, the increase in tariffs to 58.26% puts Indian shrimps at a significant competitive disadvantage against other nations such as Ecuador, Vietnam, Indonesia and Thailand, as they have much lower tariffs.
Domestic shrimp exporters enjoy the advantage of an evolved infrastructure and strong distribution networks in the US, while production in other countries is not expected to rise substantially in the near term. The ability of shrimp processors to divert their exports to alternative markets such as the UK (due to the free trade agreement), China and Russia will support volume to some extent in the second half of this fiscal.
According to Rahul Guha, a senior director with Crisil, the headwinds will impact processors and discourage farmers from continuing to invest in shrimp farming. Farmers incur upfront costs for land lease, seed and feed. Additionally, investments in equipment for aeration, electricity and overall pond management and biosecurity have substantially raised the production cost.
Falling business volume will also cause operating margin to plunge to its decadal low of 5-5.5% this fiscal, he said, adding this will be due to the impact of the tariff plus levies, lower capacity utilisation due to loss of revenue and shrinking sale of value-added and large shrimps, which were mostly exported to the US and fetched higher revenues and margins.