Brief reprieve

The US decision to review the anti-dumping duty on shrimp exports from India may have perked up the seafood export industry, but it does not automatically warrantee good times for this sector.

The US move is essentially the result of the changed circumstances in the wake of the December 26 tsunami disaster, which had severely damaged the shrimp resources of the Indian coastline. It had been feared that the drop in availability, coupled with the punitive anti-dumping tariff, would scale down exports by 10-15 per cent.

But what needs to be realised is that the US consent to undertake this "changed circumstances review" is not predictive of the final outcome of the review. Nor does it indicate that the anti-dumping tariff, though lifted for now, will not be reimposed once the effect of the tsunami is seen to have passed off.

The woes of the Indian seafood export industry are not confined to shrimp exports to the US. These are wide-ranging and deep-rooted. Shrimp exports account for over 65 per cent of the total export earnings of the seafood industry and are confined mainly to Japan and the US markets.

This dependence on a single product and a limited market makes the seafood industry a high-risk exporter. Any adverse movement in supplies at home and demand abroad poses a formidable threat to exports and the industry' s survival.

Besides, the growth in global demand for shrimps has begun to dwindle since the mid-1990s, thereby sharpening competition among shrimp exporters. As it is, compared to many other Asian fish-exporting countries, the price realisation for Indian exports is relatively low.

At the same time, the domestic demand for fish, including shrimps, is swelling, thanks to the increase in population, rise in income levels and changes in food consumption patterns in favour of high-value foods. This has necessitated a review of the fish-export strategy and the need to enhance price realisation through a diversified fish product export basket.

Fortunately, the country's seafood industry has begun investing in fish processing and preservation technology to produce and export value-added fish products for the high end of the market. But this trend is confined to a few relatively large players. Small and medium players, who predominate the Indian fisheries sector, lack the wherewithal to go in for expensive fish-processing technology.

This disability was reflected also in the recent failure of many an export unit to meet new environmental and safety norms, including sanitary and phyto-sanitary standards, being laid down by the major fish-importing countries.

Indeed, the industry's investment capacity has taken a further beating as banks and financial institutions have lost confidence in the risk-bearing capacity of the generally low net-worth seafood export units and have become wary of lending to them.

Under the circumstances, the seafood industry and policy makers need to put their heads together and evolve a strategy for increasing the industry's capacity for making demand-oriented investments as also for withstanding shocks that result from the vagaries of the global market.