September 17, 2013
India's shrimp industry faces losses due to rupee volatility
India's local shrimp export industry is experiencing problems due to the volatility in the value of the Indian currency against the US dollar.
Indian seafood exporters are forced to face the loss of around US$1.57/kg of shrimp exported as the rupee stands firm against the dollar. The rupee had increased 6.89% between September 4 and September 11, from INR67.73/US$1 to INR63.37/US$1.
Gorachand Mohanty, the president of the Sea Food Exporters Association of India (SEAI), Odisha region, said "As the negotiations are made on dollars irrespective of the exchange rates, the appreciation in rupee by about 7.35% recently has hit the exporters badly."
Another concern to seafood exporters is the short supply which has caused raw material prices to surge significantly.
The purchases of shrimp have been reduced in order to stabilise the market, said Prava Ranjan Patnaik, managing director of Falcon Marine Exports Ltd.
There was also a misconception among exporting sectors that the rupee's slump would bring about a boost in exports and discourage imports. Due to other hindering factors, factory owners, exporters and farmers are not in a position to benefit from the rupee's depreciation.
"Notwithstanding the rupee depreciation, relatively high inflation and infrastructural deficits continue to raise the costs of production and constrain the ramping-up of exports," said Aditi Nayar, an economist at the rating agency, ICRA, an arm of the Credit Rating Agency Moody's Investors Service.