August 12, 2008

 

Indian seafood exports dampened by sluggish market, high input costs
 
 

India's seafood exports have declined 15 percent due to a depressed global market and domestic inflation that has driven up production costs by about 25 percent.
 

India's seafood export market has decreased to Rs 7,300 crore from Rs 8,200 crore, with shipments falling by 15 percent in quantity and 12 percent in value, according to Ilias Seit, secretary of the Seafood Exporters Association of India.

 

As a result, India's seafood exports suffered a negative growth rate of 11 percent in 2007-08. India's low cost advantage has been eroded by a 25-percent increase in production costs, as freight rates, energy, labour and infrastructure become more expensive.

 

Indian seafood exporter West Coast Foods said the company's production costs have jumped by 20 percent while global prices of seafood products have dropped by 25 percent.

 

Orissa's Seafood Exporters Association president Gorachand Mohanty said total seafood exports in Orissa have dropped to Rs 400 crore from Rs 420 crore, and India's seafood exports are expected to plunge by 30 percent in the current fiscal year.

 

India faces tough global competition from China, Vietnam, Thailand and Indonesia as the world market now prefers vannamei shrimps over India's black tiger shrimps, the latter of which constitutes 54 percent of India's seafood exports. Global demand for black tiger shrimp has declined by 18 percent and its price has fallen from US$11 to US$10.6.

 

In order to keep up with global competition, India's government has provided perks to exporters, which includes the Duty Entitlement Passbook Scheme that provides 8 percent credit on duty payment to exporters. However, the credit will be reduced to 5 percent from September. In addition, India has allowed the scientific cultivation of vannamei shrimps while WTO has also abolished anti-dumping duties levied by the US on Indian seafood exporters.

 

Seit said it's now up to the exporters to adopt better farming methods and operational efficiencies to enhance their international competitiveness.

 

However, some exporters like West Coast Foods have chosen to turn away from the export market and focus on the domestic market instead. West Coast Foods owner Haji Yakub said the company has incurred huge losses that forced them to exit the exporting business and divert their supplies to the more lucrative domestic market.

 

US$1 = Rs 41.88 (August 12, 2008)

Rs 1 crore = 10 million

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