Indian seafood revenue may soften in FY19.

KOCHI: After two years of robust growth, India’s seafood exports may ease in 2018-19 due to an increase in the supply of shrimps, sluggish purchases by the US and the impact of higher anti-dumping duty, according to Crisil Research. 

Growth in India’s seafood export revenue may drop to 17% to 18% in 2018-19, the research house said in its latest report. That compares with growth of 21% and 31% in the previous two financial years, which was triggered by a crunch in supply as production in China, Vietnam and Thailand was hit by early mortality syndrome disease. 

Crisil said a spurt in supply following the increased production of vannamei shrimps in India and other key exporting countries and slower purchases by the US, a major importer, could crimp revenue this year. 

Export realisation in dollar terms is expected to fall 10% this year. However, steady volume growth – at 20%-21% in the past couple of years – and expected depreciation in the rupee will limit the impact, it said. 

Currently, the US is the largest importer of Indian shrimps, clocking a compound annual growth rate of 26% in the past five years. However, realisations from the US have started to taper due to a pile-up of inventory, Crisil said. The impact of declining demand is already visible as international shrimp prices traded 7% lower between December 2017 and February 2018 from a year ago. Prices fell by 11% in March and are poised to decline further. 

“Right now, the situation is tricky as the US retailers have reduced prices. But once consumption improves there, demand will go up,” said Tara Ranjan Patnaik, vice president of the Kochi-based Seafood Exporters Association of India. 

The Crisil report said higher anti-dumping duty by the US on seafood can shear realisations further. While an increase in the duty to 2.34% from 0.84% on Indian shipments may have a limited impact, the report observes that Indian exporters could be indirectly hurt more in the near term by a hike on Vietnam seafood to 25.39% from 4.8%. Vietnam is the second-largest market for Indian seafood exports, which it processes and re-exports to the US and Europe. 

Although India’s seafood export data for 2017-18 is yet to come out, the industry expects exports to cross $6 billion (Rs 40,000 crore). In 2016-17, the country exported 1.13 million tonnes of seafood valued at $5.78 billion.