India’s shrimp sector is leaning on non-US markets to cushion the impact of steep tariff-related losses in the United States, its largest traditional export destination, according to a new report by CareEdge Ratings. Exports surged 18 per cent year-on-year to USD 2.43 billion in the first five months of FY26 (5MFY26), led almost entirely by accelerated shipments to markets such as Vietnam, Belgium, China and Russia, which together contributed 86 per cent of incremental export value gains.
CareEdge noted that shipment volumes rose 11 per cent to 3.48 lakh metric tonnes during the period, signalling strong demand recovery from non-US geographies that now account for 57 per cent of overall exports, up from 51 per cent a year earlier. The shift reflects a deliberate diversification strategy as Indian exporters confront a challenging tariff and pricing environment in the United States.
Exports to the US grew just 5 per cent in 5MFY26 as buyers front-loaded orders ahead of steep reciprocal tariffs imposed from 27 August 2025, the report said. Effective tariff rates rose to around 18 per cent between April and August 2025, compared with 13–14 per cent for Ecuador and Indonesia. Post-August, Indian shrimp exporters face an effective duty of nearly 58 per cent, while competitors remain within an 18–49 per cent range.
The sharp increase has eroded the price advantage of Indian shrimp in US retail and foodservice channels, pushing buyers toward Ecuador and Indonesia, CareEdge said. The result has been a visible drop-off since August, with exports falling 35 per cent from July levels. The seasonal third-quarter peak was effectively brought forward, leaving shipments vulnerable to potential contraction in the second half of the fiscal year.
CareEdge expects export momentum to moderate by 10–12 per cent in the coming months. “India’s shrimp export performance is expected to moderate by 10–12% on the back of US tariff headwinds, partially cushioned by diversification into other geographies and frontloaded shipments during the initial months of the fiscal,” said Ratheesh Kumar, Associate Director, CareEdge Ratings.
Among non-US markets, Vietnam and Belgium posted the strongest growth, each doubling export value to USD 0.18 billion and USD 0.14 billion, respectively, with Vietnam strengthening its position as a re-export hub and the EU market responding positively to improved traceability compliance by Indian suppliers. China remained the top non-US destination with a 16 per cent rise, though Japan remained stable.
The report highlights operational pressures that may weigh on profitability. Operating margins are expected to moderate by 150 basis points, particularly in FY27. “Support to operating margins is likely to arise from partial cost pass-through and softer farm-gate prices,” said Sandeep P, Director, CareEdge Ratings. He added that growing exports of value-added shrimp products—up 27 per cent globally and 78 per cent in non-US markets in 5MFY26—should help reduce reliance on commodity-grade shipments and improve earnings stability.
CareEdge noted that relief measures from the Reserve Bank of India, including temporary moratoriums and extended export credit tenures, are expected to ease near-term liquidity pressures.
Looking ahead, the agency emphasised the need for trade diplomacy and regulatory alignment to preserve India’s competitive edge. “To realise its full potential, India must accelerate bilateral trade agreements and strengthen compliance frameworks—particularly in areas such as traceability, sustainability, and cold-chain infrastructure,” said Priti Agarwal, Senior Director at CareEdge Ratings. She added that building a resilient and geopolitically balanced supply chain is crucial to sustaining long-term growth.
With US demand uncertainty persisting and tariff exposures unlikely to abate soon, the shrimp sector’s focus on market diversification and higher-value products is emerging as central to maintaining export momentum and protecting margins. |
