KOCHI: The Trump administration’s decision to impose 59.73% penalty tariff on Indian seafood products has dealt a huge blow to the seafood export industry.
With buyers in the US asking them to hold shipments, the exporters are exploring opportunities in alternative markets like the European Union (EU), Japan and China. However, the situation seems to be worsening as importers in China, expecting a price crash, have also asked Indian exporters to hold shipments.
India’s seafood export stood at Rs 60,523 crore in 2024. Around 40% of the total exports go to the US market. Kerala exports seafood worth `7,000 crore. China, Japan, Vietnam, Thailand Belgium, Spain, Italy, the UAE and Canada are the other major importers.
Frozen shrimp accounts for around 66% of the earnings. India is the second largest exporter of seafood products in the world and the fisheries sector supports 2.8 crore people. Following US tariffs, the Union government has been trying for market diversification toward the EU, Japan and Southeast Asia.
“We are facing crisis as the high penalty tariff has made us lose our competitive edge in the US market. Ecuador, which is facing a very low tariff of 10%, is expected to gain control of the US market,” said Seafood Exporters Association of India (SEAI) vice-president Alex K Ninan.
“After America’s reciprocal tariff of 25%, we have been unable to compete as the total tariff comes to 34.5%. Southeast Asian countries like Vietnam, Indonesia and Thailand are facing just 20% tariff; we are not able to compete with them. We have no other option but to explore other markets like China, Japan and the EU. However, the importers are expecting a price crash and it is difficult to tide over the crisis,” Alex said.
Shipments that were in transit when the tariffs were announced and get cleared by September 17 are exempted from the tariff. The exporters hope that the shipments in transit will reach the US before then. Meanwhile, they have pleaded banks to provide a 30% increase in working capital as they will be forced to hold shipments until the crisis alleviates.
“Around one third of our exports, amounting to around `20,000 crore, goes to the US market. Exploring new opportunities needs time and we will have to hold our inventory. We have urged the finance ministry to intervene and tell the banks to provide 30% enhancement of working capital. The banks should declare a two year moratorium on loans,” Alex said, adding, “The crisis will adversely affect the fish processing industry, fishermen and aquaculture farmers.”
SEA Kerala president Premananda Bhat said: “The buyers know we are in crisis and are asking to hold the stocks expecting a price crash. This will affect the livelihood of around 10 lakh people. There are around 110 fish processing units in Kerala that employ around 50,000 people. Around two lakh people are indirectly dependent on the industry; around 80% of them are women. The Centre should intervene.”