Exporters of marine products, rice jittery as US tariffs loom
By Sandip Das
India’s marine products and rice exports and domestic poultry industry are likely to be impacted if the Trump administration imposes reciprocal duties on products imported from the country.
At present, frozen shrimp exports to the US, which has a major share in the country’s marine products exports, does not attract duties in the US, while India keeps 30% tariff on marine products imports from the US.
“Any imposition of duties on seafood by the US would hamper exports,” KN Raghavan, secretary general, Seafood exporters association of India, told FE. He stated that the association has requested commerce and finance ministries to abolish import duties on seafood with the exception of items like fish varieties such as Basa from Vietnam and Sardine from Gulf countries for protecting domestic fishing communities.
In FY24, India exported seafood worth of $ 7.38 billion to the US, which has 35% share in its total shipment to several countries. Frozen shrimp continue to be the principal item exported to the USA with a share of close to 92%. The US exports only Atlantic Salman to India in small quantities.
Several agricultural products agricultural products facing high tariff differentials include food preparations (currently at 150% ), walnut (100%) dairy products- cheese and skimmed milk powder (30-60%), and cut chicken legs (100%),
While semi-milled and wholly milled rice face an 11.2% tariff. “A blanket tariff hike would reduce the competitiveness of these exports, against competitors like Vietnam, Thailand, and Indonesia,” according to ICRIER policy note.
In 2023, India has agreed to bring down the import duty on some fresh and processed food items, including blueberries, cranberries, frozen turkey and duck, to 5-10%.
“Any reduction in import duties on chicken legs from the US would impact the domestic poultry industry as cheaper imports would surge,” Ricky Thapar, joint secretary, Poultry Federation of India, said. Officials said higher duty structure is aimed at protecting the growing domestic poultry industry from competitively priced American chicken legs.
Fresh apples, a major US export, have historically been subject to a 50% duty, which was recently reduced to 15% following negotiations. India has initiated steps to reduce certain tariffs for bourbon whiskey from 150% to 50%.
India imposes higher tariffs than the US, especially in agricultural products where it imposes a simple average tariff of 39% and a trade-weighted tariff of 65%, compared to the US’s 5% and 4%, respectively, according to a ICRIER paper.
“Given this stark tariff disparity, the proposed reciprocal tariffs could have a substantial impact on India’s agricultural exports to the U.S., which is the largest trading partner of India,” the note stated.
India had a trade surplus of $ 3.46 billion in agriculture in 2023, according to ICRIER.
Sources said that the challenge for India is to protect domestic small farmers interest while ensuring that trade relations with the US remain stable.
India has maintained that its tariffs are within the overall limit of WTO regulations, while expressing its willingness to negotiate with the US on bilateral basis.
According to ICRIER paper, instead of tariff protection, India must focus on right instruments such as enhancing productivity and modernizing its agricultural value chains to remain globally competitive in agricultural produce.
This article has been republished from The Financial Express.