The U.S. Department of Commerce recently imposed a 5.75% countervailing duty (CVD) on frozen shrimp imports from India. This rate is significantly higher than the duties on competing countries like Ecuador, Indonesia, and Vietnam. This article outlines the implications of this decision on Indian exporters and the broader seafood industry.

---

Overview of the Countervailing Duty (CVD)

The CVD aims to counter subsidies given by the Indian government to shrimp exporters. It has placed Indian shrimp at a disadvantage in the U.S. market. Below is a comparative look at the CVD imposed on different countries exporting frozen shrimp to the U.S.:

Country	Countervailing Duty (CVD)
India	5.75%
Ecuador	3.75%
Indonesia	2.84%
Vietnam	2.84%

---

Key Data and Financial Impact

With Indian shrimp exports totaling $2.9 billion to the U.S., this increased duty is expected to have a notable impact on revenue. Indian exports to the U.S. constitute around 40% of India’s seafood exports, making the U.S. a critical market. The additional financial burden of the CVD on Indian exporters will likely affect financial results. This is especially true for sales completed in the past six months. The reason is the lag in duty payments and adjustments.

Metric	Data
Annual Export to U.S.	$2.9 billion
Share of Total Seafood Exports	40%
Market Price (2023)	$7.40 per kg
Market Price (2021-22)	$8.57 per kg

---

Comparative Disadvantage

With a CVD of 5.75%, Indian shrimp faces a competitive disadvantage compared to other countries. Combined with an additional 1.3% anti-dumping duty (which may increase), Indian exporters will need to re-evaluate pricing strategies to maintain competitiveness in the U.S. market. Lower shrimp prices, dropping from $8.57/kg in 2021-22 to $7.40/kg, add to the pressure as margins shrink amidst rising competition and additional U.S. duties.

---

Industry and Government Response

In response to these challenges, Indian industry representatives are urging the government to contest the CVD. Efforts to renegotiate or mitigate these duties are critical, as the Indian seafood industry faces pressure not only from U.S. regulations but also from broader geopolitical and economic factors that impact global demand.

Broader Market Trends and Challenges

The Indian seafood export sector faces numerous challenges beyond the CVD, including:

• Geopolitical Tensions: Global market access can be influenced by geopolitical conditions, affecting demand for Indian shrimp.
• Global Demand Fluctuations: Subdued global demand has also impacted prices, which have already seen a drop.
• Pricing Pressure: Indian shrimp prices are currently lower than in previous years. The added duty could further compress margins. This situation makes it difficult to sustain profitability.

Conclusion

The 5.75% CVD imposed by the U.S. on Indian frozen shrimp exports highlights a crucial issue. It underscores the need for swift action to protect Indian exporters’ interests in one of their largest markets. With other competing countries facing lower duties, India’s position in the U.S. market is under significant pressure. It remains essential for government and industry stakeholders to collaboratively address these challenges, potentially through negotiations with U.S. authorities, to prevent further erosion of market share.