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    Home»Commodities»Trump’s tariffs brings Indian shrimps and basmati to a boil
    Commodities

    Trump’s tariffs brings Indian shrimps and basmati to a boil

    April 3, 20256 Mins Read


    The move, part of Trump’s “Liberation Day” economic plan, could erode India’s price advantage, disrupt supply chains, and open the door for rival exporters from Vietnam, Thailand, and South America.

    The US is India’s top market for agricultural goods, with bilateral farm trade totalling $6.6 billion in 2024. India exported $5 billion worth of agricultural products, while imports stood at $1.5 billion. Now, with tariffs coming into force starting 9 April, exporters are bracing for a potential drop in shipments and market share losses.

    Read this | Trump’s tariff strike: India hit with 27% duty as trade war escalates

    They warn that the tariffs could hit key agricultural exports, particularly basmati and non-basmati rice, shrimp, wheat, and buffalo meat, which together account for 46% of India’s farm trade with the US.

    Trump’s order states that these tariffs will remain in effect until the U.S. trade deficit and underlying “non-reciprocal” policies are addressed, but he has left room for modifications—allowing tariffs to rise in response to retaliation or fall if a trading partner aligns with the US’ economic and security interests.

    Read this | The tariff timeline: How Trump 2.0 policy is reshaping global trade

    The existing average tariff on the agriculture, meat, and processed food sectors was 5.29%. For shrimps and seafood, it was 7%.

    To be sure, India’s weighted average tariff has already declined from 17% in 2023 to 10.66% following duty cuts in the Union Budget for 2025-26, a move that could affect how the US frames its tariff arguments.

    Seafood in turmoil

    According to a February report by the Global Trade Research Initiative (GTRI), the hardest-hit segment will be fish, meat, and processed seafood, worth $2.58 billion.

    Shrimp—India’s largest seafood export to the US—will struggle to remain competitive, potentially ceding market share to rival suppliers from Ecuador, which enjoys a 10% tariff, according to industry executives.

    “The imposition of 27% (additional) tariff on Indian exports has come as a huge surprise for us. We were not expecting it,” said Pawan Kumar, president, Seafood Exporters Association of India.

    “This is not only detrimental to India but also farmers, fisherman and exporters. Currently, Indian exporters are subjected to around 7% duty including countervailing duty and anti-dumping duty,” he added. “Once the increase in tariff is in place which is from 9 April, (Indian) exporters would be subjected to 33% tariff, which will make us un-competitive in the US market.”

    Kumar added that the association would request “the Indian government to lower the tariff on US imported seafood, which is around 35%, so that they (the US) can also reverse the tariff”.

    “It is beyond doubt that the imposition (of Trump’s tariffs) will hurt Indian exporters and ultimately fisherman based in coastal areas,” said Manish Pushkania, managing director of Kolkatta-based ZA Seafoods.

    “Since we are subjected to countervailing duty and anti-dumping duty, we are still unclear whether the new tariff will replace both the duties or be an additional one,” he said. “In any case, we stand to lose and countries like Ecuador stand to gain, which enjoys a tariff of 10%.”

    Basmati on boil

    Basmati rice exporters are also bracing for impact.

    The US is among the key buyers of Indian basmati, with exports totaling about 2.7 lakh tonnes in FY24, valued at around $300 million, according to the Ministry of Commerce. While this represents a fraction of India’s total basmati exports—5.24 million tonnes worth $5.84 billion—the US remains an important market alongside Saudi Arabia, Iran, Iraq, the United Arab Emirates, and Yemen.

    “As far as our business is concerned, from a consumption standpoint, we expect minimal impact—at least within the diaspora. Historically, inflation hasn’t significantly affected their demand. That said, it’s too early to gauge the full extent of these tariffs. We should have more clarity in the coming weeks,” said Ashwani Arora, managing director and CEO, LT Foods Ltd, which sells basmati rice under brands like Daawat.

    However, India’s basmati exports could still face headwinds as higher duties push prices up. Arora noted that Pakistan, another major basmati supplier, has been hit with a 30% duty—slightly higher than India’s 27%—which could give Indian exporters a relative edge.

    Price hikes will be inevitable going forward, he said.

    “With these duties in place, price hikes are inevitable. We are evaluating adjustments and will finalize our decision by next week. Lower-income groups may shift to more affordable rice brands,” he added.

    Arora also said the Indian government is engaging with industry stakeholders to address concerns over trade disruptions.

    ITC Ltd, which exports agricultural commodities to over 85 countries, including the US, declined to comment.

    Agriculture, dairy, and processed foods

    Processed foods, sugar, and cocoa exports, valued at $1.03 billion, will also face a tariff hike, making Indian snacks and confectionery less attractive to US buyers.

    Exports of cereals, vegetables, fruits, and spices, worth $1.91 billion, will witness a direct hit. Dairy products, a smaller but significant segment at $181.49 million, will be affected, making ghee, butter, and milk powder more expensive and potentially reducing their market share.

    Edible oils, including coconut and mustard oil from India will become costlier for US importers. Alcohol, wines, and spirits will also see an impact—122.10%—though total exports in this category are limited to $19.2 million.

    Read this | In charts: How Trump’s reciprocal tariff plans could impact India

    Higher tariffs on live animals and animal products, worth $10.31 million, will further squeeze Indian exporters.

    Higher tariffs on Indian agricultural exports could push US importers toward alternative suppliers, further squeezing India’s market share, trade experts warn.

    To soften the impact, the GTRI suggests that India propose a ‘zero-for-zero’ tariff strategy’ to the US, under which both countries would mutually eliminate tariffs on select goods rather than negotiating a full bilateral trade agreement.

    India would need to identify product categories where it can remove import duties on American goods without harming domestic industries, in exchange for similar tariff cuts from the US.

    India tariffs under scrutiny

    The US Trade Representative’s (USTR) annual report, released 31 March, flagged India’s high tariffs across multiple sectors as a key trade barrier.

    The report pointed out that India imposes tariffs of up to 150% on alcoholic beverages, while other items such as vegetable oils (45%), apples, corn, and motorcycles (50%), automobiles and flowers (60%), and natural rubber (70%) also face steep duties. Certain agricultural goods—including coffee, raisins, walnuts (100%)—are among the most heavily taxed.

    “High tariff rates present a significant barrier to US agricultural exports, particularly in processed foods, poultry, potatoes, citrus, almonds, and fast-food ingredients,” the report noted.

    The USTR highlighted that India’s WTO-bound agricultural tariff average 113.1%, with some as high as 300%, giving India considerable flexibility to adjust tariffs at any time. This, the report said, creates uncertainty for US exporters, farmers, and ranchers.

    Also read | In charts: Why Donald Trump thinks the US is being ripped off

    Tensions over tariffs are not new. In June 2019, after the U.S. revoked India’s preferential tariff benefits under the Generalized System of Preferences (GSP) programme, India imposed retaliatory tariffs ranging from 1.7% to 20% on 28 US products, including almonds, apples, walnuts, chickpeas, and lentils.

    (With inputs from Suneera Tandon.)



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