India’s seafood exports to the European Union is set to drop sharply this year after its biggest competitor Vietnam signed a free trade agreement (FTA) with the European Bloc in July that helps it export products to the EU without any customs duty, according to the Maharashtra region head of the seafood exporters body.
“Vietnam has just signed an FTA with the EU in July, making it a zero-duty trading partner and seafood was one of the main things,” Rustom Irani, President, Maharashtra region of The Seafood Exporters Association of India told BusinessLine.
“Vietnam is a big competitor to us in farm shrimp. It used to be number one in the world and India came up in a very big way and overtook it. Now, the problem is that because of the FTA, on a lot of the products, Vietnam is having a competitive advantage of almost 6% over us. Our shrimp exports to the EU attracts a customs duty of 6% and they have zero duty,” Irani said.
“The feedback we get from ministry officials – as exporters we can’t talk to the EU officials- and MPEDA is that the FTA is a barter kind of thing. We have seen US President Donald Trump harping on his favourite topic Harley-Davidson motorcycles while referring to trade ties with India. Similarly, the EU talks about dairy: open-up your markets for dairy and we’ll open-up our markets also. And, they know that the dairy sector is a sacred cow so to speak in India. With the government not in a position to do much on the issue, this year we expect our seafood trade with EU to actually come down significantly,” Irani stated.
India’s seafood exports are valued at some Rs 50,000 crore annually.
After almost 15 years of export growth to the EU specially from the western region – the EU was a very important seafood trading hub- all of a sudden what we find is that the EU has sort of “had a change of heart because India’s exports to Europe had really shot through the roof”,Irani pointed out.
And it’s “going to be a challenge going forward” as more countries rachet-up trade barriers – whether explicit or non-trade – particularly on seafood business, says Irani.
“On inspections for example, India is the only country on which the EU actually does 50% sample testing whereas most of the countries have only 10% sample testing. The more sample testing is done, the more chances are they’ll find something. The main contention over India’s seafood exports is the anti-biotic residue found in shrimps. Even though India’s export inspection council is the nodal agency for doing the testing – they do the testing we end up spending a lot of money on testing – and then one sample fails the test, the containers are banned and exporters are put on red alert. Indian exporters too have now got to a point where they feel it’s just not worth it. Out of India’s top ten exporters to Europe, four have already said we won’t export to Europe anymore. So, the seafood exporters are staring at tough times ahead,” Irani said adding that they will look at other markets to export their products.
Irani reckons that the Vietnam FTA could be a ploy by the EU to make India sign a long-pending FTA with the Bloc.
“Vietnam signed the FTA whereby they are allowing European products like dairy to come in to Vietnam. India has not signed up so far. That’s why they are using that as a pressure tactic to force India to sign. EU feels India could lose more by signing, they look at it from a macro level. According to the EU, India is holding up the signing of the FTA. India has its own views on it. It depends on who is going to blink first,” Irani added