Indian shrimp exporters to see marginal uptick in revenues this fiscal: Crisil

A Crisil Ratings analysis of 63 shrimp exporters, accounting for 55 per cent of the industry revenues, has indicated that Indian shrimp exporters will see a marginal 2-3% uptick in revenues this fiscal on improved realisations stemming from rising prices and currency gains. However, export volumes will be flat because of the higher tariffs expected to be imposed by the US and subdued demand in key importer nations, as sluggish economic growth affects disposable incomes.

Operating margins will be under pressure because the tariff burden will be passed on only partially and gradually, as seen in the past, even as exporters scout for other markets and improve offerings through value addition. Credit profiles will continue to face challenges as elongated working capital cycles induce further recourse to credit lines that, in turn, would moderate debt protection metrics. Capital structures are expected to remain comfortable, however.

Global shrimp demand has flatlined at 4 million tonne (MT) over the past few fiscals and will likely remain subdued this fiscal, too. That is because of muted economic growth in the key importing regions, such as the US, the European Union and China, impacting consumer spending. Indian exporters have around a fifth of the global market share as of now, while domestic production is expected to remain flat at 1.2 MT due to non-remunerative global prices impacting shrimp culture and growth, this fiscal.

India exports close to 48% of its produce to the US. The reciprocal tariffs1 announced by the US, though paused for the time being, will benefit South American exporters such as Ecuador, the largest shrimp exporter in the world. Indian exporters will face higher competition from them in the raw, frozen, and peeled frozen categories, which have low value addition and are less remunerative.

Says Himank Sharma, Director, Crisil Ratings, “Last fiscal, the waters turned choppy for Indian shrimp exporters as prices and competition increased after a countervailing duty of 5.77% was slapped by the US. This fiscal, with the US imposing reciprocal tariffs — even as other major markets such as the European Union and China see sluggish economic activity — exporters will likely see flattish demand. But as realisations tick up, overall growth in revenues should be in low single digits this fiscal.”

Though the low-value-added shrimp exports will likely see increased pressures, Indian exporters have a competitive advantage in the value-added segment over other Asian peers, such as China, Vietnam, Thailand and Indonesia, which face higher tariffs but enjoy over one-third market share in the US. The value-added products currently account for only ~10% of total Indian exports, but this could increase to 15-17% over the next 2-3 years with the tariff benefit.

Despite the increase in the share of value-added products, limited volume growth and tariff impact will cut the profitability of shrimp exporters by a significant 50-60 basis points (bps) this fiscal to 6.5-6.7% — that’s after falling 70 bps last fiscal. Also, working capital cycles may stretch as collections and inventory are likely to increase amid demand pressures. This will result in additional working capital debt being contracted by the sector, even as long-term debt is added for capital
expenditure on value-added products, while capacity utilisation remains moderate.

Says Nagarjun Alaparthi, Associate Director, Crisil Ratings, “Despite rising debt, the capital structures of shrimp exporters will remain healthy. However, reducing profitability and higher interest costs on working capital and long-term debt will lead to a moderation in the interest coverage ratio. Gearing is expected to be comfortable at 1On April 2, 2025, the US government announced reciprocal tariffs on goods imported from other countries. The tariffs proposed for
some of the key shrimp exporting nations include 26% on India, 10% on Ecuador, 46% on Vietnam, 36% on Thailand and 32% on Indonesia. On April 9, 2025, a 90-day pause on tariffs was announced, and the base tariffs on most countries were fixed at 10%. Gearing is expected to be comfortable 0.5 times as on March 31, 2026, as against 0.46 times as on March 31, 2025, while the interest coverage ratio is likely to moderate to 4.3 times in fiscal 2026 from 4.8 times last fiscal, as profit margins reduce.”