Mumbai: Shrimp exporters’ revenue is likely to decline 12 per cent year-on-year in 2025-26, hit by the steep tariffs imposed by the US, effective August 27, a report said Wednesday.
The US is India’s most critical market for frozen shrimp, representing 41 per cent of the export volume and 48 per cent of the value in FY25, India Ratings and Research (Ind-Ra) said in the report.
The 50 per cent reciprocal tariff (58 per cent effective tariff rate after additional anti-dumping duty and countervailing duty) is expected to significantly impact trade flows, eroding India’s cost competitiveness against its peers, namely Ecuador, Vietnam, and Indonesia and thus impacting export volumes, it added.
As per Ind-Ra’s analysis of India’s major shrimp companies, aggregate revenue could decline 12 per cent year-on-year, while margins could compress around 150 bps year-on-year in FY26.
Ind-Ra also expects some working capital stress to emerge.
“The steep reciprocal tariff in the key export market of the US will render Indian shrimp less competitive compared to Ecuador, allowing Ecuador to gain significant market share from India.
“While Indian shrimp processors are exploring domestic markets and expanding into non-US markets, such as China, the EU, Japan, and the UK, these regions offer lower price realisation and limited scale,” Ind-Ra Associate Director, Corporate Ratings, Adarsh Gutha said.
Hence, he said, the Indian processed shrimp industry is likely to witness moderated revenue and margins in FY26.
“Strategic diversification, investment in value-added products, and improving operational efficiency will be crucial for maintaining competitiveness and financial stability,” added Gutha.
For exporters eyeing diversification to other geographies, the receivable days (average of 50 days in FY25 across large shrimp processors) could be lesser than those offered to customers with long-term relationships, the report said.
However, the increase in inventory days is expected to increase working capital requirements, leading to a stretch in working capital days to 140 days by FY26-end, it added.
Ind-Ra believes a continuation of elevated tariffs could impact US shrimp exports over the medium term.
Pressure on volumes, realisation and margins is expected to have a greater impact on the credit profiles of mid-sized players with a lower liquidity cushion and stretched credit metrics.
PTI
