Seafood exporters see bright spots in Russia as rupee settlement is allowed

Production of farmed shrimp, the mainstay of marine products export from India, surpassed 9 lakh tonnes in calendar year 2021 (File image)

The recent Reserve Bank of India (RBI) notification allowing international trade settlement in rupees has come as a fresh lease of life to the Indian seafood industry. The move will help the industry meet the $8.6 billion export target for the current year as it enables exporters to vigorously access the Russian market. The seafood industry has been facing a slump in global shrimp prices and weak demand in Europe.

At present, around 80 processing companies are exporting seafood, mostly frozen shrimp and surimi, to Russia. The Marine Products Export Development Authority (MPEDA), nodal agency for development of the seafood industry, has been trying to gain entry for more companies to the Russian market.

40 firms knocking on Russia’s doors

“Russia has not given permission for new companies from India to ship seafood to the country. There are 30-40 companies seeking permission to export to Russia. We have requested the Russian authorities to consider it,’’ said KN Raghavan, MPEDA chairman.

In 2021-22, India’s seafood export to Russia, at a meagre 15,391 tonnes, was worth Rs 752.97 crore. India’s total seafood export was 1,369,264 tonnes, worth Rs 57,586 crore ($7.76 billion). Vietnam is currently a big supplier of seafood to Russia.

Russia now accepts seafood from India, tested by the Export Inspection Agency (EIA), and from companies approved by the Federal Service for Veterinary and Phytosanitary Surveillance (FSVPS). FSVPS is the agency in Russia that regulates import of food products. India has submitted a list of new companies recommended by the EIA to Russia, but the FSVPS is yet to approve them.

International trade settlement in rupees reduces the risk of currency fluctuations and will benefit both countries significantly. “Once that happens, Indian seafood will have a considerable presence in the Russian market,’’ said Jagdish Fofandi, president of Seafood Exporters Association of India. The only stumbling block seems to be the ongoing war with Ukraine.

Export performance slightly better, but Ecuador a concern

According to Raghavan, seafood exports in the first quarter of FY23 are slightly better than a year ago. But the industry has expressed concerns about a dip in shrimp prices, particularly in the United States, the largest market for Indian shrimps, with a share of 37 percent in dollar terms.

“Shrimp prices have fallen by 5-10 percent. One reason is the increase in supply from Ecuador to the US market. If this trend continues, it will discourage aquaculture farmers here from stocking more shrimps in the farms,’’ Fofandi said.

India’s cultured shrimp production, comprising mostly the Vannamei variety, has been ranging from 8-9 lakhs in the last few years. But, Ecuador has steadily increased its output, becoming the leading supplier of frozen shrimps with an output of over 1 million tonnes.

The production of aquaculture shrimps, the mainstay of India’s seafood exports, was over 9 lakh tonnes in 2021. The output in the first five months this year has been normal but the industry is expecting a slight shortage in the second half due to rain and floods in Gujarat and a fall in prices.

“This year, we are expecting a 15 percent drop in production. Apart from the damage to farms from floods in Gujarat, the decline in prices may also affect production. The price dip happened in the last few weeks,’’ said S Muthukaruppan, former president of the Society of Aquaculture Professionals.

Chinese market unpredictable

Seafood import by China, the second-biggest market for Indian shrimps, is expected to resume in full swing as the country has relaxed its rules for checking consignments for COVID-19 traces. However, the Indian seafood industry feels it is too early to say whether the rupee trade settlement will happen with China. “China needs lots of quantity for internal consumption and exports. But it is an unpredictable market,’’ Raghavan said.

Weakening euro is another factor pointed out by exporters in realising the export target of $8.6 billion. In the last fiscal, India’s seafood export, despite several odds, reached $7.76 billion, which was 97 percent of the target of $7.8 billion.

Strict monitoring of antibiotic residues and rejection of some consignments had also led to a decline in seafood shipments from India to the European Union in the last few years. “There have been no rejections so far this year. An EU delegation is coming to India by the end of September. We hope to take up the pesticide residue issue with them,’’ Raghavan said.