November 11, 2008

India's seafood exports may fall 20-30 percent in volume this fiscal to March 2009 as demand receives a knock from the global economic slowdown.

Overseas seafood demand generally spikes in November and early December, but orders have decreased this year, said Anwarh Hashim, president of the Seafood Exporters Association of India.

Some buyers have requested for lower prices while others are trying to renegotiate contracts, Hashim said. Overseas buyers are also seeking to extend credit over the usual 120 days at a time when India's banks are unwilling to increase post-shipment credit.

Demand for lower prices from EU buyers, who account for nearly 35 percent of Indian seafood exports, has increased after the US dollar rose against the euro. US shrimp demand, which accounts for at least 50 percent of Indian seafood exports, has also dipped as lower-priced fish becomes the new favourite of the US.

Hashim feared this tendency could spread to the East Asian countries as well. To add to woes, freight rates have increased by nearly 20 percent.

The combination of a depreciating rupee, higher dollar, and rising production and packing costs have also made the situation difficult for shrimp producers and feed manufacturers.

Hashim said that the situation is made worse as some banks are taking longer to negotiate documents backed by letters of credit from the US and the EU. It now can take up to a week before banks release funds, compared with the earlier same-day service, Hashim added.

While exports till a month ago have not been affected, the months ahead when most orders are booked and shipments made, will likely look bleak, said Hashim.

India's seafood exports totalled Rs 7,500 crore in the fiscal year to March.