India’s shrimp export volumes are projected to fall 15–18% in FY26 after the US hiked import tariffs to 58.26% from August 27.
Export revenues are expected to decline 18–20% year-on-year despite a shipment surge in Q1 ahead of the tariff hike.
India exported $5 billion worth of shrimps in FY25, with the US accounting for about 48% of shipments.
India's shrimp export volumes are expected to contract by 15-18% this fiscal following the US decision to raise import tariffs on the commodity to 58.26% from August 27, a report said on Friday.
This will lead to a fall in realisations even as exporters look to change their product mix and scout for alternative export destinations, the report by Crisil Ratings said.
Thus, revenues, which were stagnant for the past four fiscals, will decline 18-20% year-on-year this financial year despite some cushion from a surge in shipments in the first quarter in anticipation of the tariff hike.
In FY25, India exported around USD 5 billion of shrimps, of which the US accounted for around 48%.
Lower revenues, coupled with the inability to pass on the tariff burden to customers, will erode the operating profit margin by 150-200 basis points.
The combination of lower revenues and subdued margins will weaken the debt protection metrics of players, following which their credit profiles will come under pressure.
According to the report, the US has long been a preferred destination for shrimp exporters due to easy market access, higher growth prospects, better profit margin and repeat customer approvals.
It continued to be a preferred destination despite anti-dumping and countervailing duties, and the recent reciprocal tariff of 10% in April 2025 as customers absorbed a portion of the tariff, the report added.
However, it stated that the increase in tariffs to over 50% puts India at a significant competitive disadvantage against other nations like Ecuador, Vietnam, Indonesia and Thailand, most of which have tariffs less than half that of India.
As a result, India's shrimp exports to the US will become unviable, and the export volume will plunge during the rest of this fiscal.
Indian shrimp exporters enjoy the advantage of an evolved domestic infrastructure and strong distribution networks in the US, while production in other countries is not expected to rise substantially in the near term, the report said.
The ability of Indian processors to divert their shrimp exports to alternative markets such as the UK (due to the India-UK free trade agreement), China and Russia will support volume to some extent in the second half of this fiscal.
"The headwinds will impact processors and discourage farmers from continuing to invest in shrimp culture. Farmers incur upfront costs for land lease, seed and feed. Additionally, investments in equipment for aeration, electricity and overall pond management and biosecurity have substantially raised the production cost," Crisil Ratings Senior Director Rahul Guha said.
Falling business volume will also cause operating margin to plunge to its decadal low of 5-5.5% this fiscal due to the impact of the tariff plus levies, lower capacity utilisation due to loss of revenue and shrinking sales of value-added and large shrimps, which were mostly exported to the US and fetched higher revenues and margin, the report said.
Debt protection metrics will moderate on lower profitability, even as working capital debt reduces due to lower business volume.
"The credit profiles of shrimp exporters focused on the US market will face further challenges after two sluggish years. The interest coverage is likely to moderate to 3.3 times this fiscal from 4.8 times last fiscal as the profit margin compresses. The financial leverage, however, is expected to remain stable at 0.5 times," Crisil Ratings Director Himank Sharma said.
