The fishery sector needs to diversify its product exports

Dr. Arpita Mukherjee, ICRIER, states that India needs to ensure food safety and standards and diversify the type of seafood products exported. We also need to study how the demands for fisheries products are changing in the importing countries. She also adds that there is a need to have more sophisticated technology driven value chain that contributes to capacity building and long-term success.

IBT: According to the ITC Trade Map, over the last 5 years, China, Japan, Vietnam, Thailand and Malaysia are the top importers of Indian fisheries products. What impact will India’s decision to stay out of the Regional Comprehensive Economic Partnership (RCEP) have on Indian fisheries exporters to the region, in your view? 

Dr. Arpita Mukherjee: According to ITC Trade Map, in 2019, India had a positive trade balance of US$ 2.43 billion (exports of US$ 2.47 billion and imports of US$ 0.04 billion) with the RCEP member countries in fisheries product (HS Code 03, 1604 and 1605). India’s export of fisheries products to RCEP members was 36% of its total export to the world in 2015, which increased to 36.64% of the total export in 2019. 

Within RCEP, over the last five years (2015-2019), China, Japan, Vietnam, Thailand and Malaysia are the top importers of India’s fisheries products.  In 2019, the share of China was 55.66%, and that of Japan was 17.16%, Vietnam was 12.86%, Thailand -8.87% and Malaysia 1.93%, respectively. India had a positive trade balance with these top five countries in 2019 – China (US$ 1.37 billion), Japan (US$ 0.42 billion), Vietnam (US$ 0.29 billion), Thailand (US$ 0.21 billion) and Malaysia (US$ 0.04 billion). Hence, no doubt they are our important markets. 

IBT: Now that India has walked out of the deal, what can be done to enhance India’s fisheries trade with these regions? What must India do in future FTA deals to reduce trade deficits and gain from such agreements?

Dr. Arpita Mukherjee: Not only have we exited from RCEP, our relationship with China has also been strained due to geo-political tensions. This is a major cause of concern for India as within RCEP, China is a key market for our exporters, as is shown by the data. We may now need to strengthen our trade agreements and relationships with other RCEP countries, while we strive to retain at status quo with China.  

We also need to examine the global value chains and study the RCEP agreement carefully. In RCEP agreement, in schedule of tariff commitment, Brunei imposed 0% tariff on fisheries products (HS 03, 1604 and 1605), while some RCEP countries, for example, Cambodia, Australia, China, Japan, Korea, New Zealand, Lao PDR, Malaysia, Myanmar, Philippines have imposed some tariff rates on fisheries products. Overall, there has been reduction of tariffs between RCEP partners as has been the case between New Zealand and Indonesia. Thus, we need to study and examine the tariffs and other impact of the agreement on trade flows.

 Also, we need to see other agreements of RCEP members. For example, if the exports to a country like Vietnam is reprocessed and sold in markets like the EU and the USA due to its trade agreements, then we are at a disadvantage. The further downstream we are in the value chain, the more we are dependent on upstream decisions and, therefore, we carry more risk.  Some of the RCEP countries are interested to open up the sea for Deep Sea Fishing (DSF) vessels. Therefore, in my opinion, there is a need for a deeper value chain study looking at the trade flows and trade agreements. This is also important to examine our agreement with select RCEP countries vis-a-vis their other agreements as we plan to revisit them. We also need to address our infrastructure, quality and productivity related challenges, which is adversely affecting our global competitiveness.  

IBT: Were the concerns of Indian fisheries sector that opening up the Indian Ocean for Deep Sea Fishing (DSF) vessels will exhaust our fragile fisheries zone & displace millions of fisherfolk misplaced?

Dr. Arpita Mukherjee: As I understand, other countries are not legally entitled to come and fish in Indian maritime waters, but all countries can do DSF in international waters. However, there is a fear that when new huge DSF vessels enter the Indian Exclusive Economic Zones (EEC), they will displace 7.5 million fisherfolk. While territorial waters extend up to 12 nautical miles from the coast, exclusive economic zones extend up to 200 nautical miles. 

We need to understand the real issue faced by Indian fishermen and address it. Do they have the requisite infrastructure/vessels/technology and/or the skills for DSF? Are these advanced enough to be competitive with other DSF players? How efficient and consistent are our supply chains from ship to shore to table? If not, infrastructure gaps may be examined and addressed, and training should be given. 

We also need to see the environment and sustainability impacts or if there is violation of regulation or any malpractices. Under the Sagarmala programme, the government plans to construct new ports and set up as many as 142 cargo terminals at major ports at an estimated cost of INR 93,000 crore. The government also plans to subsidise the purchase of deep-sea vessels and impart training under the Deen Dayal Upadhyaya Grameen Kaushalya Yojana in five coastal states. These will help to improve the competitiveness of our fishery sector. 

IBT: What challenges are Indian fisheries exporters facing while trading with these nations? How can they be resolved?

Dr. Arpita Mukherjee: More recently the relationship with China has been strained and India’s seafood exports to China are facing the delays in the clearance of marine product consignments.  It now takes more than 10 days for cargo clearance against the normal three-day process, which is a cause for concern for perishable produce. Often COVID-19 related issues have been cited for the delay. 

India’s shrimps’ exports have faced food safety and standards related barriers in Japan and other key markets like the US and EU. From time to time, we have faced restrictions. For example, in 2017, Thailand, imposed a temporary suspension of import of shrimps from India.

If we have to export, we need to focus on ensuring food safety and standards and diversify the type of products exported. We also need to study how the demands are changing in the importing countries. In the past, I have strongly recommended implementation of international standards on food safety and risk management – this may be a painful process but will be a core strategy, positioning India positively with its current and future trading partners. 

India has mostly small-scale coastal fishing and large-scale commercial fishing is still rare; hence, state-of-the-art infrastructure and technology adaptation is low. A study by me and my colleague Nibha Bharti found that our cost of production is higher than our competitors, and our productivity is low. For example, electricity and logistics costs are higher than our competitors from RCEP countries. There is a lack of fishing harbours and infrastructure at ports is not of the comparable quality with RCEP member countries leading to wastages in the value chains. Interest rates for loans are also high. This year the sudden lockdown due to COVID 19 further led to losses of perishable produce and domestic demand has been affected along with exports.  

In India there is also need for training and awareness building on compliance on international guidelines/codes. International guidelines and codes are mostly voluntary and generally help countries in formulating and implementing the appropriate measures for the management of deep-sea fisheries in the high seas. However, if these are abided by it is easy to market the product in international market and compete with the international standards. Therefore, it is important to look at sustainable and best business practices along with quality standards, which we do not often focus on.  

IBT: What opportunities does the finalisation of RCEP provide Indian fishery sector, and how would it change their approach to the market?

Dr. Arpita Mukherjee: One must study the RCEP agreement in details before one can answer this question. Generally, a trade agreement leads to tariff reduction among members. However, whether it is an opportunity or increased competition that needs to be examined. As we are not a member of this agreement, RCEP members like Vietnam may gain more. Vietnam is also moving into more commercial high-tech manufacturing. With RCEP and its other trade agreements it can increase its exports. 

A trade agreement can be beneficial if we have the right infrastructure, productivity and global competitiveness. We need to have go-to-market studies and explore new markets and diversify products. As I have mentioned earlier, we need to study the trade agreements that we have with individual RCEP members like Japan, Malaysia and the ASEAN agreement and see how we can enhance our exports through these agreements. At the same time, we need to address our domestic issues related to food quality and safety standards and infrastructure gaps and costs. There is a need to have more sophisticated technology driven value chain that contributes to capacity building and long-term success.  

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Dr Arpita Mukherjee is a Professor at ICRIER. She has several years of experience in policy-oriented research, working closely with the Government of India and policymakers in the EU, US, ASEAN and in East Asian countries. She has conducted studies for international organizations such as ADB, ADBI, ASEAN Secretariat, FCO (UK), Italian Trade Commission, Konrad-Adenauer Stiftung (KAS), OECD, Taipei Economic and Cultural Centre (TECC), UNCTAD and the WTO and Indian industry associations such as NASSCOM, FICCI, IBA, IDSA and EICI. Her research is a key contributor to India’s negotiating strategies in the WTO and bilateral agreements. The views expressed here are her own.