India’s shrimp export volume is headed to fall 15-18% this fiscal with the U.S. raising tariff to 58.26% with effect from August 27, CRISIL Ratings said in a note.
“Realisations would fall, too, even as exporters look to change their product mix and scout for alternative export destinations,” it said
“Thus, revenues, which were stagnant for the past four fiscals, will decline 18-20% on-year this fiscal despite some cushion from a surge in shipments in the first quarter in anticipation of the tariff hike. In fiscal 2025, India exported around $5 billion of shrimps, with the U.S. accounting for around 48% of this,” the rating agency said.
The 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. Consequently, their credit profiles will come under pressure, it said.
“An analysis of 63 shrimp exporters rated by us, accounting for 55% of the industry revenues, indicates as much,” it added.
The U.S. has long been a preferred destination for shrimp exporters because of 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.
“However, the increase in tariffs to over 50% puts India at a significant competitive disadvantage against other nations such as 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,” CRISIL said.
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 ability of Indian processors to divert their shrimp exports to alternative markets such as the U.K. (due to the India-UK free trade agreement), China and Russia will support volume to some extent in the second half of this fiscal,” it said.
Rahul Guha, Senior Director, CRISIL Ratings said, “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. To boot, the risk of diseases, reduced harvests and unprofitable global prices have been forcing farmers to look at alternative cultures that entail lower investments and limited risks,” he said.
“This process will accelerate because of the impact of tariffs. Consequently, diversification of exports and increasing domestic consumption in the long run will be crucial to the viability of shrimp farming,” he added.
Falling business volume will also cause operating margin to plunge to its decadal low of 5.0-5.5% this fiscal. This will be due to three reasons: the impact of the tariff plus levies, lower capacity utilisation due to loss of revenue and shrinking sale of value-added and large shrimps, which were mostly exported to the U.S. and fetched higher revenues and margin.
Debt protection metrics will moderate on lower profitability even as working capital debt reduces on lower business volume, according to CRISIL.
Himank Sharma, Director, CRISIL Ratings, “The credit profiles of shrimp exporters focused on the US market will face further challenges after two sluggish years.”
“The interest coverage of players rated by us 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 time,” he added.
Published – August 29, 2025 12:48 pm IST
