India's shrimp exports are expected to decline by 15-18% in FY26 due to US tariffs exceeding 59%, with revenues potentially dropping 18-20%, despite some initial shipment surges in anticipation of tariff hikes.

In FY25, India exported around $5 billion worth of shrimp, with the US accounting for approximately 48%, making the Indian shrimp industry highly dependent on the US market.

The primary export, Vannamei Shrimp, faces reduced demand in the US, which accounts for 35% of India's seafood exports worth $7.38 billion in FY25, with the US import value totaling $6 billion annually.

The decline in business volume and margins is projected to reduce operating margins to a decadal low of 5-5.5% in FY26, impacting overall industry health.

The industry faces challenges such as reduced business volume, increased costs for farmers and processors, and decreased capacity utilization, which may discourage further investment in shrimp cultivation.

High tariffs and levies, along with lower capacity utilization and shrinking sales of high-margin large shrimp, are discouraging investments in shrimp farming and processing, potentially impacting future production.

Lower revenues and margins will negatively impact debt protection metrics and credit profiles of shrimp exporters, with interest coverage expected to decline from 4.8 to 3.3 times.

Despite anti-dumping and countervailing duties, the US remains a preferred market due to better profit margins and customer loyalty, although recent tariffs have made exports more challenging.

Exporters are exploring alternative markets such as the UK, China, and Russia, supported by free trade agreements, but these are unlikely to fully compensate for US market losses in the near term.

Indian exporters are attempting to divert shipments to alternative markets such as the UK, China, and Russia, supported by free trade agreements and existing infrastructure.

The rise in tariffs has put India at a competitive disadvantage compared to countries like Ecuador, Vietnam, Indonesia, and Thailand, which face lower tariffs and can better compete in the US market.

The tariff increase will weaken the profitability of Indian shrimp exporters, reducing operating profit margins by 150-200 basis points and pushing margins to a decadal low of 5-5.5%.

Despite some support from alternative markets, the overall outlook for Indian shrimp exports remains bleak due to the US tariff hike, affecting the industry's growth prospects and financial health.

The increased US tariffs, including a 59.71% duty and a 50% tariff announced by President Trump, have significantly impacted Indian exporters, eroding operating profit margins by 150-200 basis points and weakening debt metrics.