The expected dip is attributed to a sharp decline in the US market demand if the reciprocal tariff continues
Emphasising that the United States is India’s most critical market for frozen shrimp, representing 41 per cent of the export volume and 48 per cent of the export value in the financial year 2025 (FY25), a report has warned that the industry could be materially hit by the steep tariffs imposed by the US.
India Ratings and Research (Ind-Ra) emphasised that the Indian shrimp export industry is expected to witness a revenue decline of 10 to 12 per cent in FY26, majorly on account of a sharp decline in the US market demand if the reciprocal tariff continues. Lower realisation from decreased cost competitiveness in the US and a shift towards lower-value segments in alternative markets such as China, the European Union, Japan, the United Kingdom and others could impact the revenues.
“The steep reciprocal tariff in the key export market of the US will render Indian shrimp less competitive compared to Ecuador, allowing Ecuador to gain significant market share from India. While Indian shrimp processors are exploring domestic markets and expanding into non-US markets such as China, the EU, Japan, and the UK, these regions offer lower price realisation and limited scale,” highlighted Adarsh Gutha, Associate Director, Corporate Ratings, Ind-Ra.
While the first quarter of FY26 saw a temporary spike in exports due to pre-tariff shipments, the second and third quarters will witness partial tariff impact as US importers struggle to find alternative suppliers for Indian export variants. Redirecting shrimp orders to other markets takes time due to regulatory, logistical, and relationship-building hurdles.
Ind-Ra opined that the impact of tariffs will be uneven across US customer segments. Premium retailers and food service chains may partially absorb higher costs due to quality, product preferences (value-added shrimp), while budget-focused buyers are likely to shift to cheaper alternatives.
The average inventory stocking of Indian shrimp processors is likely to rise to 85 to 90 days in Q3FY26 and further to 100 days in Q4FY26 due to a continued subdued US demand and fewer shipments. Indian exporters may purchase raw shrimp supplies and hold inventory for a longer duration, hoping for better prices or tariff relief, rather than sell at minimal margins. Longer holding periods could strain storage capacity and increase costs, further complicating inventory management and costs, the report noted.
