Indian shrimp exporters face mounting losses

INDIA – Thousands of shipping containers filled with frozen shrimp from India risk being held up or devalued as new tariffs announced by former US President Donald Trump threaten to reshape the seafood trade.

Exporters in India, the largest supplier of shrimp to the United States, are facing a potential 26% tariff, which has sparked widespread concern across the country’s US$7 billion seafood industry.

The revised tariffs, expected to take effect in July, have already caused many US buyers to pause or renegotiate contracts, forcing Indian exporters to slash their offer prices by around 10%.

In Andhra Pradesh, where the majority of India’s shrimp farming takes place, small-scale farmers like S.V.L. Pathi Raju say their operations are suffering heavy financial setbacks due to the sudden market uncertainty.

Raju, who grows shrimp in saline ponds near the coastal village of Ganapavaram, said the declining demand has left him with unsold stock and no clarity on who will resolve the pricing crisis.

Another farmer, Uppalapati Nagaraju, who began shrimp cultivation just two weeks before the tariff news, expressed frustration, admitting he had no prior knowledge of international trade duties and now regrets his investment.

While the 26% tariff is still pending, the current 10% rate has already made US importers cautious, leading to fears that thousands of containers may be rejected or purchased at a loss.

India exported seafood worth US$7.3 billion last year, with shrimp being the dominant product and the US serving as its top market.

Andhra Pradesh alone accounted for 92% of the shrimp sold to the United States, which was valued at approximately US$2.5 billion.

Seeking alternatives, Indian industry officials are now engaging with state government panels to explore new markets, including China and the European Union.

However, some fear increased competition from Ecuador, a much closer supplier to the US that may face only a 10% tariff and already ships about US$1.55 billion in shrimp annually.

Despite this, Ecuadorian industry leaders argue that they currently lack the processing capacity to replace Indian volumes, and worry that India may crowd them out in other shared markets.

At an Indian shrimp processing facility, Reuters observed the step-by-step journey of the seafood—from cleaning and sorting to freezing—before it embarks on a 40-day sea voyage to US ports like Houston, Miami, and New York.

According to G. Pawan Kumar, president of the Seafood Exporters Association of India, even a 10% tariff could erase profits entirely, as most exporters operate on margins of just 3% to 4%.