Can India’s billion-dollar shrimp industry survive US tariffs?

India's shrimp export trade, a long-regarded profitable pillar of the Indian economy, is experiencing rough seas. What started as a humble trade relationship has developed into a billion-dollar enterprise, employing thousands of farmers and export firms. But now, the doubling of U.S. tariffs on some Indian products could upset this delicate applecart.

Tariffs bite hard

The newest setback occurs as the U.S. administration imposed a substantial hike in import tariffs on certain Indian goods, including fishery products, in retaliation for India's continued Russian oil imports—an issue that the West has been attempting to sequester.

Among the most severely impacted are Tamil Nadu shrimp exporters, as aquaculture is an important source of livelihood for many rural groups.

Farmers complain the timing could not have been worse. Having weathered the pandemic and increasing input prices, most are now finding it difficult to sell their produce at profitable prices.

"The price of cultivating shrimp has gone up enormously, and with the tariff, our market access to major markets such as the U.S. is reducing," Ramesh Kumar, a shrimp farmer in Tuticorin, says. "We are left with stocks we cannot offload and accumulating loans."

A billion-dollar industry at stake

India is one of the world's leading exporters of shrimp, injecting more than $5 billion into the economy every year. It employs millions directly and indirectly, from coastal districts.

Tamil Nadu, Andhra Pradesh, and Gujarat dominated production in recent years, exporting to markets in the U.S., Europe, and Japan.

But the U.S. doubling tariffsfrom 10% to 20% could render Indian shrimp uncompetitive compared to producers from Southeast Asia, such as Vietnam and Ecuador.

Trade experts warn that the ripple effect could be far-reaching. “Exporters will struggle to absorb the cost hike. Unless alternative markets are rapidly found, we’re staring at an industry slowdown,” says Anil Mehta, a senior trade analyst.

Political and economic friction

The increase in tariffs is directly attributed to India's geopolitical alignment. Even after global pressure to cut diplomatic relations with Russia after invading Ukraine, India has still been buying Russian oil at discounted prices based on energy security.

The U.S., which is forefront in sanctions against Russia, views India's action as upsetting global efforts, causing retaliatory actions that now affect unrelated industries such as shrimp exports.

This tit-for-tat strategy reveals weakness in India's trade strategy, particularly when it is based on Western markets.

Struggling farmers, uncertain future

For shrimp farmers such as Ramesh Kumar, matters are hopeless. Some of them have already sold their assets to meet day-to-day expenses, while others are shifting to local markets, which are significantly less profitable."I don't know how long we can continue.

Without export earnings, it doesn't make sense to go on farming shrimp," says Kumar. Industry associations are now petitioning the government for immediate action—requesting export subsidies, new markets, and diplomatic action to roll back tariffs.

An industry at a crossroads

With tensions between India and the U.S. unresolved, the future of the shrimp industry is uncertain. For an industry that had held out hope for growth, innovation, and economic development, survival is the challenge now.

In a world characterized by geopolitical tensions, the Indian shrimp industry must make a stark choice: adapt, diversify, or decline.

Video Partner: DW