India’s frozen shrimp export in jeopardy as the US imposes hefty CVD
The US Department of Commerce (DOC), as part of its final determination in the anti-dumping duty investigations on frozen water shrimp from India, has imposed a higher countervailing duty (CVD) compared to Ecuador, Indonesia and Vietnam. This could hit Indian seafood exports to the US and provide an edge to the competing countries.
Research House InCred Equities said the decision is likely to impact Indian shrimp exporting companies, as the final countervailing duty (CVD) could be in the range of 5.7 per cent compared with 3.75 per cent for Ecuador, 2.84 per cent for Indonesia and Vietnam.
The DOC’s findings are based on investigations into whether these countries and their companies received subsidies that gave them an unfair advantage in the US market.
Indian shrimp exporters, according to InCred Equities, would need to book additional costs related to the increased CVD, especially for sales completed over the past six months, potentially impacting immediate financial results. However, Ecuador holds a competitive advantage over Indian companies, which may affect market positioning and profitability for Indian exporters.
Equador negotiations
On March 26, the DOC made preliminary affirmative determinations in CVD investigations of frozen warm water shrimps. Ecuador seemed to be hit the hardest by the preliminary determination of CVD. But they had negotiated a much lower CVD, whereas the Indian companies were surprised by an increase over the preliminary rates.
Pawan Kumar G, national president of the Seafood Exporters Association of India, told businessline that the impact would be severe as India’s shrimp exports to the US stood at $2.9 billion and the country’s 40 per cent of seafood exports go to the US. The decision to impose CVD will hit both farmers and exporters and there are chances for raw material prices to go up, making Indian shrimp products less competitive vis-à-vis other competing countries.
Besides the 5.7 per cent CVD, there is an additional 1.3 per cent anti-dumping duty on Indian products and there are also chances that the anti-dumping duty may go up further. “If it happens, Indian shrimps will become most expensive in the US markets”, he said.
On the findings of receiving subsidies by the US authorities, Pawan Kumar said Indian government is not offering any subsidies rather they are reimbursing all the taxes incurred for shipments under schemes such as RoDTEP (Remission of Taxes and Duties on Exported Products) as per WTO compliance and international standards.
He also sought the immediate intervention of the Government and the Commerce Ministry to strongly fight India’s case in the US to avoid any further impact on India’s shrimp shipments.
Industry sources said India’s shrimp exports to the US have come down last year due to cheap competition from Ecuador. The unit value of Indian shrimps has come down to $7.40 per kg from $8.57/kg in 2021-22. Moreover, seafood exports are facing headwinds because of the geo-political situation and there is a subdued demand across the markets.