NEW DELHI: In order to discourage imports to the US, the Donald Trump administration has imposed a non-tariff barrier by including shrimps in the Seafood Import Monitoring Program (SIMP) which may hurt exports from India. The US is the largest market for USD five billion Indian seafood sector.
Earlier US imposed anti-dumping duty. Although this duty on India was not high, India was exporting shrimp to US via Vietnam which was facing steel hike in anti-dumping from India. Even EU had said that India should monitor primary production of shrimp before exporting to EU.
SIMP requires traceability information on imported seafood from point of capture to point of first sale in the US in order to thwart Illegal, Unreported and Unregulated (IUU) fishing activity. SIMP will come into effect from January 1, 2019.
Inclusion of shrimp in the SIMP has come a double whammy for the Indian exporters as US has recently enhanced the raised the anti-dumping duty (preliminary) by 25.39 per cent for Vietnam from 4.8 per cent last year.
India largely exports block frozen shrimp to Vietnam for reprocessing and forward shipment to its customer countries like China, EU, Japan and USA.
Indian exporters are already battling with the lower international shrimp prices due to the glut supply.
"SIMP is a kind of the non-tariff barrier on the shrimp exporters. USA being the largest market for Indian exports, the exports is likely to hit. The move of the Trump administration may be to provide the domestic players a level playing field. SIMP will discourage new exporters for making ways to the US", said an exporter.
In recent years, Indian seafood exports have been driven by shrimps, revenue from which grew at 21 per cent and 31 per cent in fiscals 2017 and 2018.
According to Crisil, the US, the world's leading seafood importer, accounted for 31 per cent of India's exports last fiscal, and for 28 per cent of Vietnam's.
Over the past five years, Indian seafood exports to the US have clocked 26 per cent CAGR. The US is also is the largest importer of Indian shrimps. Last year, 27 per cent of US shrimp imports were from India. It is also a significant export market for Vietnam, which is the second-largest export destination for India - as 28 per cent of India's exports are directed to Vietnam and 17 per cent of Vietnam's exports are directed to the US.
Hence, any change in trade policies by the US, concerning India or Vietnam, could impact Indian exports, the report of the rating agency said.
Crisil has predicted that US shrimp export realisations (in dollar terms), that account for 70 per cent of export value, are expected to fall 10 per cent in fiscal 2019 due to increased production of Vannamei shrimps in India and other key exporting Countries, and slower offtake from the US.