Already plagued by problems on the production and export fronts, India’s seafood sector fears a further setback due to the retaliatory tariff proposed by the United States and the impending hike in freight rates.

US trade authorities are planning retaliatory tariffs against India’s imposition of a 2% tax on revenues generated from digital services offered in India.

One of the items mentioned is frozen shrimp. India’s largest aquaculture shrimp market is the United States, which accounts for about 50 percent of the country’s total production, or $ 2.5 billion annually. The shrimp export sector, which employs nearly 10 million people, mostly shrimp farmers, will be severely affected and require urgent government review, according to a note prepared by the Seafood Exporters Association. from India.

Freight rates have been gradually increased for reefer containers to the United States, from $ 3,500 in March 2020 to around $ 6,500 now. The note says the seafood industry has now been told by Maersk Lines that as of May 1, the rate will be $ 12,500. After Maersk, the world’s largest shipping company, other shipping companies may follow suit. The same proportional increase is the situation for other destinations in the world.

In fact, for the United States, this results in an increase in shipping cost per kilogram from ₹ 16 to ₹ 60. There is absolutely no way to absorb this into the selling prices, as the seafood market is almost buyers driven and not a sellers’ market.

The seafood export sector, after recording record growth year after year over the past 10 years (from ₹ 8,000 crore in 2009-10 to ₹ 47,000 crore in 2019-20), has experienced its worst year in 2020-2021 with a 20 percent drop in turnover and volumes, said Alex K. Ninan, president of the India-Kerala Region Seafood Exporters Association.

The seafood export sector, which was healthiest just at the start of last year, had secure plans of ₹ 1million crore by 2025. It all looks very dark and far away now. The sector faces problems on all fronts of budget support, various major markets being disrupted or blocked, serious problems with the source of primary production in both capture and culture fisheries, a sharp rise in the costs of freight and other costs, and the erosion of the net worth of many businesses and the related financial support that does not come from the banking industry, he said.

Business with China, which accounts for around 25 percent of India’s total seafood exports, has been completely disrupted. Border issues have had an effect on the normal flow of business.

The association urged Prime Minister Narendra Modi to include issues of strict measures on antibiotic residues in shrimp shipments, which have been lower in recent years than in several other countries, in his summit trade talks. India-EU shortly.

The issue of the delay in issuing the MEIS from April to August 2020 amounting to ₹ 1,000 crore was compounded by setting a cap of ₹ 2 crore per exporter on MEIS provisions at 5 percent FOB, for the period from September to December 2020. The sector has called for the immediate introduction of the RODTEP system of remission of duties and taxes on exported products (RODTEP) in place of the MEIS.

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