India’s fisheries sector is an underappreciated success story. Output has more than doubled since the start of the century, from 56 lakh tonnes in 2001 to 137 lakh tonnes in 2019. A large share of this growth has come from inland fisheries that have more than tripled the output from 28 lakh tonnes to 95 lakh tonnes in this period. The most spectacular transformation, however, has been in exports that have grown astronomically from Rs 6,400 crore in 2001 to Rs 46,500 crore in 2019.
These developments have transformed India into the second largest fish-producing country in the world.
Andhra Pradesh, the biggest fish producer, has been at the forefront of this transformation. Despite the state’s bifurcation, production has more than doubled in six years, going from 16 lakh tonnes in 2012 to
34 lakh tonnes in 2018. In this period, Andhra’s fisherfolk and fish farmers have delivered a CAGR of 11.4%, outstripping the national CAGR of 5.5%. As a result, today the state contributes to over 40% of India’s total exports .
It is in this context that the PM Matsya Sampada Yojana (PMMSY) sets two aspirational goals. First, doubling the income of fisherfolk and fish farmers and second, doubling exports from Rs 46,500 crore in 2019 to Rs 1,00,000 crore in 2025. While the PMMSY’s targets are ambitious, we must ground them in the present state of the sector. The scheme targets an annual growth rate of 9% in production but growth in recent years has averaged only 7%.
Exports need to grow at a CAGR of 11.5% to double by 2025, but since 2015, we have only been able to achieve a CAGR of 8.5%. More worrying is the relatively tepid growth in the per tonne value of exports that have shown a CAGR of just 2% in this period. This means that export growth is being led by higher volumes. This volume-driven growth model may not be sustainable because India is already utilising 60% of its fisheries potential.
The bottom line is that our country must focus on increasing the unit value of exports if it is to achieve the target of Rs 1 lakh crore of exports by 2025. To accomplish this, the export basket needs to diversify from raw, frozen goods into processed and value-added fish products. Take, for instance, shrimps. This contributes to 70% of India’s fisheries exports in value. In 2019-20, India exported Rs 34,000 crore of shrimps, of which less than 30% was in value-added and processed form. Raw shrimp is frozen and exported to China, Vietnam, Thailand and Indonesia.
There it is further processed into products like breaded and skewered shrimps for export to the American and European markets. Processing adds value to the tune of 40-120%, depending on the final form of the shrimp. This is the value that the domestic fisheries industry is currently losing to competing countries. Post-harvest processing has more benefits than merely increasing the per tonne value of exports, the foremost of which is increasing high-wage rural female employment. Industry experts estimate that post-harvest processing units of shrimp could employ up to 50-100% more workers than frozen shrimp units do.
The average wages for these workers are 80-100% higher and women dominate these jobs. Exporting high-value products would also allow the industry to increase its margins from the present 3-4% to 12%. Higher margins will further be passed on to farmers, effectively increasing the farm-gate prices for their produce. All things considered, giving an impetus to the post-processing industry would result in a win-win situation for all stakeholders—fisherfolk and farmers, workers, processors-exporters and the government.
So what can be done to achieve this? A good point to start would be to focus on the two factors of production—capital and labour. On the former, capital subsidies tailored for fisheries can be carved out under the Union food processing ministry’s existing Mega Food Parks Scheme (MFPS). On the latter, India lacks a skilled workforce for the post-harvest processing units. Vocational education institutions should be set up with industry collaboration. Industry linkages shall ensure appropriate skilling and favourable labour market outcomes for workers.
The recent announcement of a Production Linked Incentive scheme for food processing, particularly marine and ready-to-eat products, is welcome. While the fine print of the scheme is awaited, linking incentives to turnover from processed, high-value fish products will encourage economies of scale in fisheries processing. The scheme should also contain a sunset clause to nudge processors towards financial self-reliance after the gestation period.
However, all things considered, India does not lack good policy design but successful execution. Well-intentioned policies have failed because of delayed approvals, multiple licence requirements, rigid scheme design, lack of coordination between the Centre and states, and abrupt policy changes. The overnight capping of merchandise exports incentive in September is an unfortunate example of the last. A curtailed incentive ate into the margins of exporters and hurt farm-gate prices.
For the PMMSY and the draft National Fisheries Policy 2020 to succeed, they will have to correct these fatal flaws in execution. Three suggestions can be made in this regard. First, being specific: While both the PMMSY and the draft Fisheries Policy mention incentivising the post-harvest processing industry, they provide little detail.
Second, resisting a ‘one-size-fits-all’ policy design: A 2015 ICRIER report on the Mega Food Parks Scheme had found that investors with differing requirements were unable to invest because of the rigid scheme. Third, creating a framework for Centre-state cooperation: Fisheries is a state subject and states will have to lead policy design by focusing on local needs.
However, much of the funding will be Central with national agencies like the NFDB and MPEDA implementing them. A coordination framework between the Centre and state/district officials is paramount. Covid-19 has shown that agriculture can act as a cushion for the national economy in adversity. Today, fisheries occupy an important part of agriculture because of the dedicated efforts of our fisherfolk and farmers. It is time that we lay the foundation for the next era of fisheries, which is in post-harvest processing and value addition. If implemented, these suggestions can unlock massive employment opportunities for farmers and female workers, and transform India into the largest fisheries exporter.
Lavu Sri Krishna Devarayalu
YSRC MP from Narasaraopet, Andhra Pradesh
(Assisted by Raghav Katyal, LAMP Fellow) (krishna.lavu@yahoo.in)