The Hindu Business Line : Seafood industry hit by rising rupee

Kochi June 12 The seafood export industry has been badly affected by the appreciating rupee as well as the soaring interest rates, and the impact would soon manifest on the 50 lakh people who depend on this sector for their survival, according to Mr A.J. Tharakan, President of the Seafood Exporters Association of India (SEAI).

Loss suffered

As a result of the rupee's relentless upward move, exporters have suffered a loss of over Rs 500 crore on existing stock.

The industry is in a spot of bother, as it cannot pass on the impact of the rising rupee to the farmers and fishermen since it would eventually lead to a shortage of raw materials.

Fishing would become a less viable economic activity and the seeding of aquaculture ponds would also stop, Mr Tharakan said.

Poor reaslisation

The fishing and culture shrimp season has just begun and exporters are not able to confirm orders because of the poor realisation of value in rupees.

Besides, the seafood export industry has also been suffering since 2004 from over-supply of cultured shrimp from South-East Asian and South American countries, resulting in poor demand for Indian shrimp, the association said.

State of crisis

Shrimp exports from India, which accounted for close to $1 billion revenue, have been in a state of crisis for the last two years with the US Department of Commerce initiating anti-dumping duty on Indian exports.

The number of shrimp exporters from India to the US has come down from 258 in 2001 to 80 in 2007.

With the reigning low international prices and a strong rupee, seafood exports are expected to come down during the current year. Highlighting the social dimension of the problem, the SEAI said the seafood industry is most often located in backward and remote areas where no other industry can be developed and uneducated people below poverty line are often engaged in fishing and fish processing.

No domestic demand

Over 16,200 fishing vessels 1,20,000 country craft and 20 lakh fishermen depend on the seafood industry for survival.

Some of the products caught by them have value only in the international market, with absolutely no domestic demand.

Even though the dollar value is fluctuating daily, the international prices are not improving.

This will lead to fishing activities becoming unviable and uneconomical, the SEAI said.

Seeks relief

The aquaculture industry is also completely dependant on the export market.

The SEAI has requested the Government to provide some incentive and relief to offset the rupee appreciation and also put in place some mechanism whereby the high bank interest burden is reduced for packing credit.

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