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Shielding Andhra’s Aqua Exports from US Tariffs
Context: As the United States implements fresh tariff measures, Andhra Pradesh Chief Minister N. Chandrababu Naidu has appealed to the central government to protect the state’s aquaculture sector.
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- In a letter to the Centre, Naidu — whose Telugu Desam Party (TDP) is an ally of the ruling coalition — sought exemption of products like shrimp from the newly announced US tariffs.
Why the Appeal?
- Andhra Pradesh is a leading exporter of shrimp and fish to the US market.
- According to state officials, aqua farmers and exporters typically operate on narrow profit margins of around 5-6%.
- The US government’s recent move to impose a 27% tariff on Indian aqua exports — in addition to a 5.77% countervailing duty and a 1.38% anti-dumping duty — will significantly raise the cost of exports and could jeopardize the sector’s viability.
Global Competition Adds Pressure
- The tariff disparity is further exacerbated by lower duties imposed on India’s competitors.
- For instance, Ecuador faces only a 10% tariff on similar products exported to the US.
- This uneven playing field could see Indian products becoming less competitive in global markets, severely impacting farmers and businesses back home.
Economic Implications for Andhra Pradesh
- If exporters increase prices to offset the tariffs, Indian products may lose market share to countries like Ecuador, Vietnam, and Taiwan.
- This would likely lead to a drop in exports, forcing farmers to scale down production.
- Andhra Pradesh, home to over 5 lakh aqua farmers — primarily from East and West Godavari districts — would bear the brunt of this fallout.
- Shrinking exports would not only reduce farm incomes but also lead to job losses in allied sectors such as cold storage, packaging, and processing.
Aquaculture: A Key Economic Driver
- Andhra Pradesh is the country’s top contributor to aquaculture production.
- In 2023-24, the state produced 0.94 million tonnes of seafood, comprising 76% shrimp and 24% fish, out of the national output of 1.84 million tonnes.
- The sector has rapidly grown over the past two decades, especially after the bifurcation of the state in 2014, with significant support from both TDP and YSRCP governments.
- Many traditional agriculture farmers have transitioned to shrimp farming, transforming their lands into aqua ponds.
Export Value and Employment
- According to the Marine Products Export Development Authority (MPEDA), Andhra Pradesh exported 347,927 tonnes of seafood worth USD 2.369 billion in the 2023-24 financial year.
- Nationally, India exported an all-time high of 1.78 million tonnes of seafood valued at US$ 7.38 billion (Rs 60,524 crore), with frozen shrimp alone accounting for 92% of the total value — the bulk of which came from Andhra Pradesh.
Naidu’s Vision for the Sector
- At the Aquatech-2.0 conclave last month, CM Naidu emphasised the importance of aquaculture as a growth engine for the state, aiming to expand the area under cultivation from four lakh acres to ten lakh acres by 2029-30.
- The fisheries sector currently contributes around 8% to the state’s Gross State Domestic Product (GSDP).
Shrimp’s Dominance in Indian Seafood Exports
- Frozen shrimp remains India’s most valuable seafood export, earning Rs 40,013 crore (US$ 4.88 billion) in 2023-24.
- It accounted for 40.19% of the total export quantity and a massive 66.12% of the total export earnings.
- The US continues to be the largest buyer, importing 2.97 lakh tonnes, followed by China, the European Union, Southeast Asia, Japan, and the Middle East.
With Andhra Pradesh’s economy heavily dependent on aquaculture, the recent US tariffs pose a serious threat to livelihoods and state revenues. CM Naidu’s call for intervention seeks to safeguard a sector that not only supports lakhs of families but also plays a vital role in India’s export economy.
