Revenue from export of shrimps is expected to dart up 20% on-year to about $4.3 billion in calendar 2021, driven by a revival in demand and restoration of supply chains that were disrupted last year by the Covid-19 pandemic. That should help India wrest global leadership in shrimp exports after slipping to the second spot in calendar 2020, a study of 97 CRISIL-rated exporters, accounting for over two-thirds of the industry’s revenue, shows.

In calendar 2020, lockdowns and supply-chain disruptions meant exports declined to $3.6 billion from $4.7 billion in 2019. Ecuador edged past India with $3.7 billion exports because it had fewer logistical snafus and focused on catering to the voracious appetite in China for raw shrimps. India, Ecuador and Vietnam account for 55% of the global shrimp sales.

Rahul Guha, director,

Ratings said., “India’s shrimp exports contracted 23% in calendar 2020 for two reasons: subdued demand in key export markets because of lockdowns, and disruptions in brood-stock supplies from the US, which impacted the domestic shrimp harvest cycle. The good part is, the second wave of the pandemic has not led to stringent curbs on movement of raw materials and stock, so it won’t be as disruptive as the first wave. Therefore, we expect exporters to manage their operations well and grow an average 20% this fiscal.”

India rose to prominence as a shrimp exporter in the past decade owing to sharp focus on quality and disease control, and by shifting to the more resilient, specific pathogen free, or SPF, brood stock from the US. Producers in Andhra Pradesh, Tamil Nadu, Odisha, and West Bengal also benefited from aquaculture zones built by state governments, and subsidies offered for electricity and capital. The Central government’s recent announcement of production-linked incentive scheme1 for the food processing sector, which includes value-added shrimps, should improve India’s share of exports this year.

A likely on-year increase in realisations by 10-12% would also lend an upside to the operating margins of exporters by 150 basis points to 9% this fiscal. Krishna Ambadasu, associate director, Crisil Ratings said “The expected and gradual increase in the share of value-added exports this fiscal also augurs well for exporters. Improved profitability and controlled working capital cycle will limit overall gearing to below 0.4 time and interest cover at over 8 times. That should strengthen credit profiles.” The retaliatory tariff proposed by the US on select shrimp products is likely to have minimal impact – estimated at just $6.3 million – on the industry’s growth. But if the supply-chain disruption in key shrimp-producing states extends into the second quarter of this fiscal, it could curtail growth, so remains a monitorable, Crisil added.

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