A steep US tariffs of 50 per cent on Indian goods is likely to hit the Indian shrimp industry the hardest, bringing down its revenue from exports by 12 per cent year-on-year in 2025-26, says a report.
The US is India’s most important market for frozen shrimp, representing a massive 41 per cent of the export volume and 48 per cent of the value in FY25, as per a report by India Ratings and Research (Ind-Ra) that was released on Wednesday.
The US administration imposed a massive 50 per cent reciprocal tariffs on Indian goods, effective August 27. Totaling 58 per cent after additional anti-dumping duty and countervailing duty has been added, the tariffs will deal a huge blow to India’s shrimp exports, edging out the country’s competitively when compared with Ecuador, Vietnam, and Indonesia, which face lower tariffs.
As per Ind-Ra's analysis of India's major shrimp companies, while aggregate revenue could decline 12 per cent year-on-year, margins could compress around 150 bps year-on-year in FY26. It also expects some working capital stress to emerge.
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"The steep reciprocal tariff in the key export market of the US will render Indian shrimp less competitive compared to Ecuador, allowing Ecuador to gain significant market share from India.
While Indian shrimp processors are exploring domestic markets and expanding into non-US markets, such as China, the EU, Japan, and the UK, these regions offer lower price realisation and limited scale," said Ind-Ra Associate Director, Corporate Ratings, Adarsh Gutha.
To counter these losses, strategic diversification would be key, he added.
"Strategic diversification, investment in value-added products, and improving operational efficiency will be crucial for maintaining competitiveness and financial stability," Gutha said.
For exporters eyeing diversification to other geographies, the receivable days (average of 50 days in FY25 across large shrimp processors) could be lesser than those offered to customers with long-term relationships, the report said.
However, the increase in inventory days is expected to increase working capital requirements, leading to a stretch in working capital days to 140 days by FY26-end, it added.
Ind-Ra believes pressures on volumes, realisation and margins is expected to have a greater impact on the credit profiles of mid-sized players with a lower liquidity cushion and stretched credit metrics.
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