February 12, 2008

 

India's marine sector must globalise to achieve global success

 
India's seafood exports business is facing countless problems and it needs consolidation in order to become a strong contender in global competition.

 

J Tharakan, vice-chairman of Marine Products Export Development Authority, said India has to achieve global sizing like China, Thailand and Vietnam.

Tharakan said India do have not a single seafood company worth US$100 million, which is the average size of profitable seafood companies in Asia.

 

Indian seafood businesses are all family-owned, therefore consolidation can only be done with a catalyst such as a merchant banker or major private equity player, said Tharakan.

 

Anwar Hashim, president of Seafood Exporters Association of India, said Indian seafood companies should also look for joint ventures with companies in major importing countries, which is the reason for global marine trade success in countries such as Thailand and Vietnam.

 

Hashim said efforts in joint ventures failed in early 1980s due to restrictions on foreign investments in those days.

 

India's main marine export is the black tiger shrimp, which accounted for 54 percent of export value in 2006 to 2007. India's aquaculture industry is focused on black tiger shrimp, but even its demand is facing a sharp decline due to competition from vannamei shrimp.

 

Hashim said vannamei shrimp's production cost is 50 percent lower than that of the black tiger shrimp.

 

Tharakan said China, Thailand, Vietnam and Indonesia have all changed production from black tiger to vannamei, and India is unable to compete against them on the aquaculture shrimp front. Selective introduction of vannamei shrimp should be allowed so that India will have a well-balanced mix of black tiger and vannamei production to meet global market demands, said Tharakan.

 

Meanwhile, rupee appreciation of over 15 percent during the year has posed serious problems for marine exports.

 

Raw material, power and labour accounted for 90 percent of production cost, making it difficult for exporters to become cost efficient to counterbalance the burden caused by the rupee appreciation, Tharakan said.

Kerala fisheries minister S Sharma pointed out that India is still known as a raw material base despite having developed processing capability.

 

G Mohankumar, chairman of Marine Products Export Development Authority, said that the exports saw an average growth of 12 percent in the last three years.