MUMBAI, May 30:  Indian shrimp exporters are likely to witness a marginal 2-3 per cent growth in revenues this financial year due to improved realisations following rising prices and currency gains, a report said on Friday.

  However, export volumes are likely to be flat because of higher tariffs expected to be imposed by the US and subdued demand in key importer nations as sluggish economic growth affects disposable incomes, Crisil Ratings said in the report.

“Last fiscal, the waters turned choppy for Indian shrimp exporters as prices and competition increased after a countervailing duty of 5.77 per cent 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 the low single digit this fiscal,” Crisil Ratings Director Himank Sharma said.

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, said the report.

Indian exporters have around a fifth of the global market share as of now, while domestic production is seen flat at 1.2 MT due to non-remunerative global prices impacting shrimp culture and growth, this fiscal.

Close to 48 per cent of its produce is exported by India to the US and the reciprocal tariffs 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, said the report.

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 per cent of total Indian exports, but this could increase to 15-17 per cent over the next 2-3 years with the tariff benefit, Crisil Ratings said.

“Despite rising debt, the capital structures of shrimp exporters will remain healthy. However, reducing profitability and higher interest cost on working capital and long-term debt will lead to moderation in the interest coverage ratio,” Crisil Ratings Associate Director Nagarjun Alaparthi said.

However, the final decision on reciprocal tariffs, revision in anti-dumping and countervailing duties in the US and their impact on demand, and forex movement need to be watched. (PTI)