Marine exports will likely remain flat over the coming two years
Pushkar Mukhewar, Co-Founder & Co-CEO, Drip Capital, opines that India must work on negotiating easier import restrictions in target markets, adherence to standards and product diversification to improve marine exports.
TPCI: What have been the main drivers of India’s stellar marine export performance in the past few years?
Pushkar Mukhewar: India’s marine exports have historically been a significant driver of the country’s overall trade. The country’s biggest marine export commodity is shrimp, fueled by a gradual industry shift away from indigenous black tiger prawn to the greater-in-demand white-legged Vannamei shrimp. Focused aquaculture policies since the introduction of Vannamei production in 2009 have seen great improvements in production per acre, better resistance to diseases, and an increase in harvesting opportunities across the year.
A key factor that has helped is an outbreak of early mortality syndrome (EMS), a fatal disease, in the shrimp stocks in Vietnam and Thailand. As supply from these competitors dried up, Indian exporters capitalized on the opportunity to become key suppliers to the US, the largest shrimp importer in the world – India’s share of the US market has risen from 15% to 45% over the last six years. Other factors that have helped include the rupee’s depreciation against the dollar as well as improvements in the supply chain from India, particularly in major supplier Andhra Pradesh.
TPCI: What are the key competitive advantages for India as an exporter in this category?
Pushkar Mukhewar: Thanks to concerted efforts to promote and increasing demands for Vannamei shrimp around the world, India is today the largest exporter of shrimp in the world. It has a significant market share in the US as well as China, the two largest shrimp importers globally. The natural ecology and topography of India’s east coast make it a highly fertile environment for shrimp cultivation and harvesting at scale, at cheaper costs. Furthermore, India’s large coastline also holds great potential for scaling up of production and exports of other marine products as well.
TPCI: How do you see the future growth scenario for the marine industry in terms of both production and exports?
Pushkar Mukhewar: Drip Capital’s research indicates that marine exports will likely remain flat over the coming two years, with perhaps a marginal increase. While the US is likely to remain a prime market for India’s marine exports, alternative markets are also opening up in Russia, China, and other Southeast Asian countries, and exporters should start exploring these opportunities for potential growth. Prices have, to a large extent, recovered and stabilized in recent months; however, continuing Indo-US trade tensions and in other trade relationships paint a rather uncertain picture about the sector’s future.
To ensure that India remains dominant in marine exports, particularly for shrimp, policymakers and other stakeholders should not only explore the diversification of target markets but also incentivize exporters and other stakeholders to improve their adherence to international quality standards. Diversification of the export basket is also an important step to be considered, as is the implementation of more schemes and policies to incentivize tech upgradation and R&D by Indian exporters.
TPCI: What are the key challenges for Indian exporters in this sector in the present scenario?
Pushkar Mukhewar: One of the key challenges Indian exports face is competition from Southeast Asia in the form of value-added products. Indian exporters usually ship raw or frozen marine produce, unlike Vietnamese or Thai exporters, who also ship ready-to-cook/ready-to-fry variants as well. Creating this value addition in marine export supply is usually capital-intensive, and with the severe credit crunch many Indian exporters face, they are unwilling to make this investment and hence lose out on potential customers.
Additionally, quality control has become a pervasive problem with Indian exports. Major importers like the US and the EU have implemented more stringent quality checks, such as under SIMP for the US. The EU, for its part, has hiked sampling requirements for shipments from India to 50% (Vietnamese shipments face only 10% sampling). The bloc has also imposed additional duties on Indian shipments because of quality concerns, all of which have combined to dampen Indian marine shipments to the EU.
Global shrimp prices have also been slumping over the course of the last year, although this will likely have a limited impact on India’s exports in the future as prices stabilize and return to normal.
TPCI: How can they be tackled at the policy/export level?
Pushkar Mukhewar: As discussed earlier, Indian policymakers need to enact schemes and policies that provide technical and financial support to help exporters create value-added export pipeline and move up the value chain. There is also a strong need to craft a national-level policy that helps promote other marine exports from India beyond Vannamei shrimp to help with diversification of the export basket.
Negotiating with buyer markets like the EU and the US to ease import restrictions will also go hand-in-hand with efforts to establish stricter quality norms and educate exporters about the need to adhere to them. One hopes that the upcoming Foreign Trade Policy, expected in early April, will pick up on many of these policy-level requirements and include measures to address these concerns.