US hike in anti-dumping to hit Indian shrimp exports: ICRA

The Dollar Business Bureau

The US’s decision to increase anti-dumping duty on shrimp imports could hit Indian exporters hard, rating agency ICRA said in a recent report.

“Any hike in anti-dumping duty (ADD) for shrimp exports from India, by the US, should lead to higher prices for Indian shrimp imports to US, making Indian shrimp un-competitive,” it said.

The US Department of Commerce (US DoC) has hiked the weighted average anti-dumping duty on shrimp imports from India to 4.98% from its earlier 2.96%.

The US has of late emerged as the largest consumer of shrimps exported from India, especially after a disease (Early Mortality Syndrome) hit Thailand's total shrimp production, thereby affecting that country’s shrimp exports to the US. The US alone accounts for almost 39% of the total volume of shrimp shipped out from India.

ICRA feels a higher reliance on the US market would lead to an increase in costs to farmers, as the impact of any increase in tax/duty will be passed on to the farmers, but not to the end customer, in order to maintain international competitiveness.

Farmers or producers of shrimp are exposed to the price risk when there is an increase or fall in duties, taxes and global prices, in the wake of highly fragmented nature of the shrimp processing industry.

During January 2013 - December 2014, when the global prices of shrimp had witnessed a steep increase due to constrained global supply on a few incidents of disease outbreak across the world, the benefits were largely reaped by the farmers.

“However, when processed shrimp prices started declining sharply from January 2015 due to higher stocks with wholesalers in the consuming countries, amidst increase in global supply (with the South East Asian countries gradually recovering from disease outbreak), farmer’s profits were impacted while the processors remained insulated,” it said.

The USA has been levying anti-dumping duty on major shrimp exporting countries since 2005 to safeguard the interest of its domestic farmers. The US Doc held its 10th annual review meeting that covered the shipments from major countries during January 2014 - February 2015.