US anti-dumping duty hike on Vietnam shrimps to hurt Indian exports

Shrimpshipments from India to Vietnam for further value addition and re-export to the US is likely to be hit with the US government hiking the anti-dumping duty (ADD) on shrimps coming from Vietnam. According to preliminary reports, the US has raised the duty by 25.39 percent from 4.8 percent last year.

India largely exports block frozen shrimp to Vietnam for reprocessing and forward shipment to its customer countries like China, EU, Japan and the US.

In 2017, India exported about 1,57,440 tonnes of shrimps to Vietnam, valued at Rs 75.41 billion and accounted for 17 percent of India's total shrimp exports in terms of volumes.

"Exports of shrimps especially from West Bengal and Odisha will be badly hit as the exporters send consignments to Vietnam for further value addition and re-exporting", said an exporter.

The Vietnam Association of Seafood Exporters and Producers (VASEP) believe that the anti-dumping duty might have been erroneously hiked by the US commerce department in its interim report.

Analysts say that hike in duty would lead to a sharp reduction in shrimp exports from Vietnam to the United States and its trickle-down effect will be felt by Indian shrimp exporters to Vietnam to an extent.

"While the ADD hike on Vietnam could be detrimental for Indian exports to Vietnam to an extent, over the medium term--if this high ADD rates on sustain, India could invest in value-added processing capacity, thus moving up the value chain in shrimp exports", said Pavethra Ponniah, vice president and sector head- corporate ratings, at rating agency Icra.

For Vietnam, EU is the largest customer of shrimp accounting for 22.4 percent of exports (volumes).

EU is followed by Japan at 18.3 percent and China/Hong Kong at 17.7 percent. USA is the fourth largest customer at 17.1 percent.

Ponniah said that a free trade agreement is being negotiated between the EU and Vietnam, which if enacted in 2018 would lead to nil duties on shrimp exports from Vietnam to EU.

Given that EU is already the largest customer of shrimps from Vietnam, the latter would divert its exports from USA to other countries like EU and high demand countries like China, she added.

This article was originally published on Business Standard