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Shrimp exports growth to be subdued after a period of 4 years of sustained growth : ICRA

Indian shrimp export volume growth is expected to slow down to 7-10% (CAGR during CY2018-CY2019) after a four-year period of robust growth of 17% (CAGR during CY2013-CY2017). This is due to the fact the while demand from China and USA is likely to grow, the European and Japanese markets are expected to remain weak.

According to an ICRA note, Chinese shrimp demand will be driven by low domestic production growth coupled with growing domestic shrimp consumption. This coupled with any potential trade agreements (under negotiation) between India and China is expected to augur well for Indian shrimp exports.

Says Pavethra Ponniah, Vice President and Sector Head - Corporate Sector Ratings, ICRA, “The Country derives almost 87% of its shrimp export demand from the USA, EU, China, Vietnam and Japan. The healthy growth in the past four years was attributed to weak production dynamics in other major shrimp producing nations such as Thailand and Vietnam leading to strong uptick in demand for Indian shrimp.”

In terms of key export volumes, market-wise, over the last four fiscals, USA has accounted for majority of India’s shrimp exports accounting for 38% of the total Indian shrimp exported during 10M CY2018 (up from 31% during CY2014). This was driven by a steady increase in USA’s demand for Indian shrimp due to the lower production in disease hit Thailand. Exports to USA witnessed a robust CAGR of 25.2% (CY2014-17); outpacing the Country’s demand growth of 7.1% (CAGR CY2014-17).

This was followed by strong exports growth to Vietnam and China (CAGR of ~40% during CY2013-17), which overtook EU in CY2016 to become the second largest destination for Indian shrimp exports (at 31% of total Indian shrimp exports). The same was due to healthy demand for shrimp in China and weak domestic production.

Among the other major destinations, EU and Japan contributed to 11.6% and 6.5% of total exports during the 10M FY2018 respectively. However, EU’s and Japan’s demand remained muted for the period CY2013-17 with EU’s shrimp imports growing at a CAGR of 3.3%, and Japan’s shrimp imports declining by 4.6%. During the same period, Indian shrimp exports to EU witnessed a CAGR of 5.2% for the period CY2013-17.

Adds Ponniah on a cautious note, “Going forward, Indian exporters face stiff competition from Ecuador, Indonesia and Vietnam. A strong uptick in major shrimp production since CY2017 has intensified competition amongst leading global shrimp exporting nations. ICRA expects increasing shrimp production amongst the top shrimp producing nations to cause demand supply mismatches inducing volatile in prices.” 


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