New US taxes on Indian products have reshaped the market and opportunities.

Indian Shrimp Exports Face Unprecedented US Tariffs, Threatening Industry and Creating Opportunity for Rivals

WORLDWIDE
Tuesday, September 16, 2025, 06:10 (GMT + 9)

A new reciprocal tax of 50% from the United States, effective from August 27, 2025, has plunged India’s key seafood export sector into crisis, leading to a projected revenue decline of 12% and opening a window for competitors like Vietnam and Ecuador.

The Indian shrimp industry is navigating its most significant challenge in recent history. A new 50% reciprocal tax imposed by the United States, effective August 27, 2025, has made Indian shrimp less competitive than that from rivals like Ecuador, Vietnam, and Indonesia. This new tax, on top of existing anti-dumping and anti-subsidy duties, brings the total effective tax rate on Indian shrimp to over 58% in the U.S. market, according to a report by India Ratings and Research (Ind-Ra).

The tax has already had a ripple effect across the supply chain. While India’s total shrimp export value increased by 13% to $2.45 billion in the first half of 2025, this was largely driven by exporters rushing to ship goods before the tariff took effect. The US remains India's most critical market, accounting for 41% of export volume and 48% of the value in the 2024-25 fiscal year. The impending decline in orders from this key market is expected to cause a significant downturn in the second half of the year.

Challenges on the Farm

The pain is being felt most acutely by shrimp farmers. Hundreds of thousands of farmers, particularly in the state of Andhra Pradesh—India's shrimp capital—are struggling with falling farm-gate prices. Exporters have reportedly cut prices by as much as ₹40 (approximately $0.48) per kilogram to absorb some of the new tariff burden. This, combined with rising input costs for things like feed and seeds, has left many farmers with minimal to no profit, prompting them to consider giving up shrimp farming entirely.

Vietnam and Ecuador Poised to Gain

As India faces a bleak outlook, its rivals are positioned to capitalize on the shifting market dynamics. Ecuador, the world's largest shrimp exporter, faces a significantly lower tariff rate in the US. Vietnam is also well-positioned to gain market share. Its shrimp exports reached $2.5 billion in the first seven months of 2025, a remarkable 24% increase year-over-year. Vietnam's growth is driven by strong demand from China and the CPTPP bloc, as well as a strategic focus on producing high-quality, value-added products that appeal to markets like Japan and the European Union.

Experts believe that while Indian businesses are exploring new markets like the EU, Japan, and China, these regions offer lower profit margins and cannot immediately replace the scale of the US market. The future of the Indian shrimp industry hinges on its ability to diversify its markets and pivot toward a more resilient, value-added export model.

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