India's shrimp export sector is gearing up for a significant boost as it prepares to ship 35,000 to 40,000 tonnes of shrimp to the United States. This follows the US government's decision to pause a planned 26% reciprocal tariff, providing much-needed relief to exporters who had been facing delays due to tariff uncertainties. The tariff reduction, which brings the duty down to a more manageable 10%, is seen as a temporary but crucial development, allowing Indian seafood exporters to fulfill pending orders that had been held up due to the looming tariff threat.

The Impact of the Tariff Pause

The tariff pause, announced on April 9, 2025, has been a game-changer for Indian shrimp exporters. Previously, shipments had been delayed as the tariff threat loomed large over the seafood industry. However, with the tariff reduction now in effect, about 2,000 containers of shrimp, which were previously held back, are now ready for export. This development has come as a relief to the Seafood Exporters Association of India, as well as to exporters who had been burdened with the uncertainty of higher tariffs.

The US market remains the largest destination for Indian shrimp exports, and this pause in the tariff increase has enabled India to maintain its market share without incurring additional financial burdens. The effective customs duty for Indian shrimp exports to the US currently stands at 17.7%, which includes countervailing duties (5.7%) and anti-dumping duties (1.8%). These tariffs typically result in Indian exporters absorbing the additional costs, impacting their profitability. The 90-day pause on the tariff gives them the flexibility to meet existing orders without the added financial strain.

Shrimp Exports to the US: A Major Industry

In FY24, India’s shrimp exports to the US were valued at an impressive Rs. 23,247 crore (approximately US$ 2.7 billion), making the US by far the largest market for Indian seafood. The shrimp export industry plays a vital role in India’s agriculture and food processing sector, contributing to both foreign exchange earnings and employment across the country.

The temporary tariff relief is crucial for the industry as it faces stiff competition from other shrimp-producing countries, particularly Vietnam and Ecuador, who are also major suppliers to the US. Indian exporters are hopeful that this pause will provide them with a competitive edge during this critical period, allowing them to meet market demand without the financial burden of increased tariffs.

Government’s Role and the Call for a "Level-Playing Field"

While the tariff pause is a welcome move, Mr. K N Raghavan, the Secretary General of the Seafood Exporters Association of India, has urged the government to take the opportunity to secure a more permanent solution for the industry. As the US remains India's largest shrimp market, it is vital that the Indian government continues to negotiate for a fair trade environment in the future.

With the tariff pause set to expire in 90 days, Mr. Raghavan has called on the Indian government to ensure that the shrimp industry is given a "level-playing field" during upcoming trade negotiations. This would allow Indian exporters to operate without the constant uncertainty of fluctuating tariff rates and strengthen India’s position in the global shrimp market.

The Future Outlook

The temporary tariff reduction provides a window of opportunity for Indian shrimp exporters to push forward with fulfilling existing orders and maintaining market presence in the US. However, as the tariff pause is not indefinite, the industry's long-term growth hinges on securing favorable trade terms in the future.

The pause comes at a critical juncture, as the global shrimp market is seeing increasing competition from other shrimp-exporting countries. By negotiating a fair and predictable tariff structure, India’s shrimp industry can continue to thrive in the US market while ensuring that local exporters remain competitive on the global stage.

Conclusion: A Positive Step for India's Shrimp Export Industry

India’s shrimp export sector has welcomed the tariff pause as a positive development, providing relief to exporters and enabling the continuation of vital shipments to the US market. With the US being the largest market for Indian shrimp, this temporary relief allows exporters to meet the existing demand without incurring additional financial burdens. Moving forward, the Indian government’s efforts to secure a level-playing field through trade negotiations will be crucial in maintaining India’s leadership position in the global seafood market.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.