Tariff shock spurs India’s seafood industry into resilient global revival

Left-leaning economists will hate to accept that, at least in one aspect, markets resemble God—helping those who help themselves. Within months of facing US President Donald Trump’s 50 per cent tariffs, India’s seafood industry, in which processing units in Andhra Pradesh played a key role, has demonstrated remarkable resilience.

It “has now begun to beat the tariff shock inflicted by Trump,” according to a news report. This has happened “through diversification, diplomatic engagement, domestic market development and strategic reopening of long-closed foreign markets.”

The successful public-private partnership could not have happened at a better time. The United States has been India’s single-largest seafood market, so the 50 per cent tariff on Indian goods in August badly hurt the exports of seafood, especially shrimp.

Several Andhra seafood processing units had to halt operations. The southern state, which exports about 80 per cent of India’s shrimp exports- and earlier sold around 70 per cent to the US- was severely affected. Overall, India exported more than one-third of seafood to the US ($7.45 billion of $2.71 billion) in the last fiscal.

The government's reaction to Trump’s tariffs was archetypal: it constituted a committee under the National Fisheries Development Board (NFDB) to strategise for building a sustainable domestic market for crustaceans.

It is highly unlikely to have inspired any confidence among the seafood sector stakeholders, for the very decision to set up an official panel reeks of bureaucratic inertia and red tape.

For a change, however, the response worked. Unsurprisingly, shrimp farmers themselves reportedly proposed practical innovations—from transporting live shrimp without water to setting up consumer-facing ‘experience centres’- to encourage wider domestic consumption.

While the domestic market could not replace the vast US demand overnight, these steps were meant to provide crucial relief and lay the foundation for long-term market stability independent of US policy fluctuations, the news report said.

It is to the credit of the officials concerned that they not only listened to the proposals presented by the farmers but also ensured the implementation of the same.

India’s economic diplomacy also played an important role, for example, in opening up the Australian market. Indian shrimps had suffered stringent restrictions since 2017 because of quality issues. The restrictions were lifted in October.

Recently, Commerce & Industry Minister Piyush Goyal announced that several old issues with the European Union had been resolved. It may be pointed out that the India-EU Free Trade Agreement (FTA) negotiations are in the final stage, with both sides desiring to conclude the deal by the end of this calendar year.

Goyal said that more than 100 Indian fishery establishments have been approved or relisted by the EU, while Russia is processing approvals for nearly 25 units. Expressing optimism over shrimp shipments, he asserted that shrimp exports “will only grow, not reduce.”

Therefore, Trump’s tariffs seem to be a blessing in disguise—at least for the seafood sector. It aroused the policy and decision makers from their bureaucratic slumber, goading them to do something more meaningful than pushing files.

It is time they realised that such productive engagement with wealth creators should not be reserved during crises; it should become the template for all future engagements with businesspersons in all sectors. Governments at all levels must learn from the success story of the seafood industry.