Brief Context
Context U.S. President Donald Trump announced a 25% tariff on Indian products; the aquaculture sector in Andhra Pradesh is likely to be severely affected. About Indian exporters are presently paying 10% tariffs and additional anti-dumping duty of 4.5% and countervailing duty of 5.8%.
Source Content
Syllabus: GS3/Fisheries
Context
- U.S. President Donald Trump announced a 25% tariff on Indian products; the aquaculture sector in Andhra Pradesh is likely to be severely affected.
About
- Indian exporters are presently paying 10% tariffs and additional anti-dumping duty of 4.5% and countervailing duty of 5.8%.
- With the US announcing the tariffs of 25%, the exporters will face at least 15% additional duty over the existing tariff structure from August 7.
- Ecuador, India’s closest competitor in sea food exports, has to pay only 10% tariff to the US while Indonesia pays 19% duty and Vietnam 20%.
- Approximately 6.5 lakh aquaculture farmers cultivate shrimp, crab, fish, and other varieties in 5.7 lakh acres in Andhra Pradesh.
Concerns
- Pressure on Coastal Economies: Andhra Pradesh, a major seafood exporter, may see local economic distress, affecting production, employment, and logistics.
- Decline in shrimp demand can disrupt cold chain infrastructure and allied services, further reducing efficiency in exports.
- Decline in Export Revenue: The U.S. accounts for 34.53% of India’s seafood export value.
- Higher tariffs will make Indian seafood less competitive, leading to decline in volumes and prices.
- Possible Trade Diversion and Rebalancing: Exporters may attempt to divert shipments to China, Japan, and Southeast Asia, but these markets have lower purchasing capacity or existing domestic suppliers.
- Rebalancing to new markets will take time, during which export losses are expected.
India’s Seafood Industry
- India is the second largest fish producing country with around 8% share in global fish production.
- India mainly has eight major fish-producing states: Andhra Pradesh, Gujarat, Karnataka, Kerala, Maharashtra, Odisha, Tamil Nadu, and West Bengal.
- India’s total seafood exports in 2024–25 reached $7.38 billion, amounting to 1.78 million metric tonnes.
- Frozen shrimp remained the top export, accounting for 66% of earnings with $4.88 billion.
- India exported marine products to 132 countries, demonstrating its extensive reach in the global seafood market. Top five destinations are: USA, China, Japan, Vietnam and Thailand.
Government Initiatives to Boost Seafood Exports:
- Infrastructure Development: The Marine Products Export Development Authority (MPEDA) offers assistance to upgrade processing facilities, establish quality testing laboratories, and participate in international trade fairs.
- This helps enhance the quality and competitiveness of Indian seafood products in global markets.
- Aquaculture Support: This support includes the transfer of advanced technologies and best practices to increase production and productivity.
- Duty Reduction: The government in Budget 2024-25 has reduced import duties on essential ingredients used in seafood feed.
- Key reductions include the complete removal of duties on fish lipid oil, algal prime, crude fish oil, and pre-dust breaded powder.
- Additionally, import duties on krill meal, mineral and vitamin premixes, and prawn/shrimp and fish feed have been significantly lowered.
- Export Incentives: The government has enhanced the Remission of Duties and Taxes on Export Products (RoDTEP) scheme.
- The refund rate for various seafood products has been increased from 2.5% to 3.1% of the export value.
- Pradhan Mantri Matsya Sampada Yojana (PMMSY): This flagship scheme aims to modernize the fisheries sector, including developing cold chain infrastructure, reducing post-harvest losses, and improving overall productivity.
Conclusion
- The new U.S. tariff regime may negatively impact India’s trade balance, especially in the short term.
- Unless mitigated by bilateral trade dialogue, export diversification, or tariff relief measures, India’s seafood sector may suffer both economic and trade competitiveness losses.
Source: TH