Indian shrimp exporters turn to new markets amid tariff strain

Mumbai: India’s shrimp export industry is undergoing a marked shift as exporters reduce their reliance on the United States (US) and expand into new geographies, while also increasing the share of value-added products to sustain growth. A recent report by CareEdge Ratings highlights how exporters are adapting to tariff challenges in the American market by diversifying their destinations and product mix.

During the first five months of FY26, non-US markets accounted for 86 per cent of the incremental export value, underscoring the scale of the pivot. Overall exports rose 18 per cent year-on-year in value terms to reach $2.43 billion, with shipment volumes increasing by 11 per cent to 348,000 metric tonnes.

While exports to the US grew by a muted 5 per cent, demand from countries such as Vietnam, Belgium, China and Russia surged, lifting non-US export values by 30 per cent to $1.38 billion compared with $1.06 billion in the same period last year.

Vietnam has emerged as a key re-export hub, while Belgium has benefited from improved compliance with traceability standards. Together, these markets have helped raise the non-US share of India’s shrimp exports to 57 per cent, up from 51 per cent a year earlier. This shift reflects a deliberate strategy by exporters to reduce dependence on the US, which has long been India’s largest buyer but is now a more difficult market due to tariff pressures.

Since early FY26, higher tariffs have eroded India’s price competitiveness in the US. CareEdge notes that India’s effective tariff rate stood at around 18 per cent between April and August 2025, compared with 13–14 per cent for competitors such as Ecuador and Indonesia. 

Following the imposition of reciprocal duties on August 27, 2025, India’s effective duty surged to 58 per cent, while competitors faced rates between 18 and 49 per cent. This disparity has had a direct impact on shipments, with exports to the US falling by 35 per cent in August compared with July.

Priti Agarwal, senior director, CareEdge Ratings, said the industry must accelerate bilateral trade agreements and strengthen compliance frameworks in areas such as traceability, sustainability and cold-chain infrastructure. “Developing a future-ready shrimp sector requires moving beyond reactive export strategies and focusing on building a geopolitically balanced and demand-driven supply chain,” she noted.

Exporters are also betting on value-added products to cushion margins. Globally, value-added shrimp exports grew 27 per cent during the period, with non-US markets recording a 78 per cent increase. This trend is expected to reduce reliance on commodity-grade exports and improve profitability. 

CareEdge projects a moderation in operating margins by 150 basis points in FY27, but the growing share of value-added products, partial cost pass-through and softer farm-gate prices are likely to provide some relief.

The report suggests that Indian exporters are taking proactive measures to mitigate the impact of US tariff headwinds. Approvals for exports to the European Union and Russia have increased, opening up new opportunities. At the same time, the industry is focusing on compliance and sustainability to strengthen its position in these markets. The emphasis on diversification and product innovation reflects a broader effort to build resilience in the face of global trade uncertainties.

India’s shrimp industry has long been a critical component of the country’s seafood exports, and the current shift marks a significant departure from its traditional US-centric strategy. By expanding into new geographies and investing in higher-value products, exporters are positioning themselves for more balanced and sustainable growth. The challenge will be to maintain momentum in these markets while continuing to navigate tariff pressures in the US. For now, the pivot appears to be cushioning the industry against immediate headwinds and laying the groundwork for longer-term resilience.

Production Linked Incentive scheme attracts ₹1,914 crore in fresh investments with strong MSME participation

Mumbai: The fourth round of the Production Linked Incentive (PLI) Scheme for White Goods has attracted 13 new applications worth ₹1,914 crore, with more than half of the applicants being micro, small and medium enterprises (MSMEs). Officials said the level of MSME participation reflects growing confidence among smaller firms in joining the air conditioner and LED manufacturing value chain.

Nine applicants have committed ₹1,816 crore to air conditioner components such as copper tubes, aluminium stock, compressors, motors, heat exchangers and control assemblies. Four others have pledged ₹98 crore for LED components including chips, drivers and heat sinks. The proposed projects span six states, 13 districts and 23 locations, and are expected to contribute to regional industrial growth and employment generation.

The scheme, launched in 2021 with an outlay of ₹6,238 crore, aims to establish a complete component ecosystem for air conditioners and LED lights in India. So far, it has attracted ₹10,335 crore of committed investment from 80 approved beneficiaries. The government expects the scheme to generate production worth ₹1.72 lakh crore and create around 60,000 direct jobs nationwide. The initiative is designed to increase domestic value addition from the current 15–20 per cent to 75–80 per cent, positioning India as a global manufacturing hub for white goods.

Officials noted that the strong presence of MSMEs in the latest round is significant, as it broadens the base of manufacturers and strengthens supply chains. By encouraging smaller enterprises to invest in high-value components, the scheme is expected to reduce import dependence and enhance competitiveness in the sector.

The PLI programme has already spurred localisation of production and attracted investment in critical components. With MSMEs now taking a larger share of participation, the government sees further momentum in building a resilient domestic manufacturing ecosystem for white goods.

India’s textile and apparel exports show resilience amid global challenges

Mumbai: India’s textile and apparel sector, including handicrafts, demonstrated notable resilience in the first half of FY 2025-26, managing to sustain growth despite global headwinds and tariff-related challenges in key markets. According to official data, exports of textiles, apparel and made-ups grew marginally by 0.1 per cent during April to September 2025 compared with the same period last year.

The performance was underpinned by diversification across markets. Exports were recorded in 111 countries, contributing $8,489.08 million in the six-month period, up from $7,718.55 million in the previous year. This reflects a 10 per cent increase in value and an absolute rise of $770.3 million. The figures highlight how Indian exporters have managed to offset pressures in traditional destinations by tapping into newer geographies.

Several major markets registered positive growth. The United Arab Emirates (UAE) saw exports rise by 14.5 per cent, Japan by 19 per cent, Spain by 9 per cent and France by 9.2 per cent. The United Kingdom (UK) and Germany also posted modest gains of 1.5 per cent and 2.9 per cent respectively. Beyond these, Egypt recorded a sharp 27 per cent increase, Saudi Arabia 12.5 per cent and Hong Kong an exceptional 69 per cent. This spread of growth across diverse regions underscores the sector’s adaptability in navigating shifting demand patterns and trade barriers.

The resilience comes at a time when global textile trade has been affected by slowing demand, rising costs and tariff-related frictions in some of India’s largest markets. The ability to maintain overall growth, even if modest, reflects the sector’s capacity to withstand external pressures. Ready-made garments, made-ups and handicrafts were among the key segments driving exports, showing that traditional strengths continue to support India’s position in global trade.

While the headline growth rate of 0.1 per cent may appear subdued, the broader picture reveals a sector that has managed to expand its footprint and secure higher value in several destinations. The increase in export earnings from a wider set of countries suggests that Indian textiles and apparel are finding new opportunities despite the challenges posed by tariffs and competition.

Sustaining this momentum will depend on continued diversification, investment in quality and design, and effective engagement with trade partners to address tariff concerns. The government’s data indicates that exporters are already moving in this direction, with the sector showing signs of resilience that could provide a foundation for stronger growth in the coming quarters.

India’s textile and apparel industry remains a critical contributor to employment and foreign exchange earnings. Its ability to adapt to global shifts while maintaining export levels highlights the importance of strategic diversification and market responsiveness. The first half of FY 2025-26 has shown that even in a difficult environment, the sector can hold its ground and build on its strengths.

₹25,060 crore export promotion mission to strengthen exports and support MSMEs

Mumbai: The Union Cabinet has approved the Export Promotion Mission (EPM), a new framework designed to consolidate and strengthen India’s export ecosystem. With an outlay of ₹25,060 crore for the period from FY2025–26 to FY2030–31, the initiative is expected to provide targeted support to vulnerable sectors, particularly micro, small and medium enterprises (MSMEs), first-time exporters and labour-intensive industries. The move represents a shift away from fragmented schemes towards a single, outcome-based mechanism that can respond more effectively to global trade challenges.

Exports remain a cornerstone of India’s economy, contributing significantly to foreign exchange earnings and employment. MSMEs alone account for nearly half of India’s total exports, yet they often face structural barriers such as limited access to affordable trade finance, high compliance costs and inadequate branding in international markets. The EPM seeks to address these issues through two integrated sub-schemes, Niryat Protsahan and Niryat Disha, which together combine financial and non-financial support for exporters.

Niryat Protsahan focuses on improving access to affordable trade finance. It includes measures such as interest subvention, export factoring, collateral guarantees and credit cards for e-commerce exporters. These instruments are designed to ease liquidity constraints and enable businesses to diversify into new markets. For MSMEs, which frequently struggle to secure credit on reasonable terms, the scheme provides a structured mechanism to reduce risk for lenders while ensuring that smaller firms are not excluded from global trade opportunities.

Niryat Disha complements this by offering non-financial enablers that enhance market readiness and competitiveness. Support will be provided for compliance with international standards, branding and packaging, participation in trade fairs, warehousing and logistics, and inland transport reimbursements. The scheme also includes trade intelligence and capacity-building initiatives, which are intended to help exporters understand and adapt to shifting global demand. Together, the two sub-schemes create a comprehensive framework that addresses both the financial and operational challenges faced by Indian exporters.

Priority support will be extended to sectors that have been affected by recent global tariff escalations, including textiles, leather, gems and jewellery, engineering goods and marine products. These industries are not only significant contributors to India’s export earnings but also major sources of employment, particularly in regions with high concentrations of labour-intensive production. By providing targeted interventions, the EPM aims to sustain export orders, protect jobs and encourage diversification into new geographies. This is especially important at a time when global trade is facing headwinds from slowing demand and rising protectionism.

The Directorate General of Foreign Trade (DGFT) will act as the implementing agency, with all processes managed through a dedicated digital platform integrated with existing trade systems. This is expected to streamline applications and disbursals, reduce administrative delays and make the system more transparent. The collaborative framework involves the Department of Commerce, the Ministry of MSME, the Ministry of Finance, financial institutions, export promotion councils, commodity boards, industry associations and state governments, ensuring that the mission is anchored in broad-based participation.

The consolidation of existing schemes such as the Interest Equalisation Scheme (IES) and the Market Access Initiative (MAI) into the EPM reflects an effort to align support mechanisms with contemporary trade needs. By bringing these under a single umbrella, the government aims to reduce duplication, improve efficiency and create a more adaptive system that can respond quickly to changing global conditions. For exporters, particularly those entering international markets for the first time, this offers a clearer and more accessible pathway to support.

The expected impact of the mission extends beyond immediate financial relief. By facilitating access to affordable trade finance, enhancing compliance and certification support, and improving market visibility, the EPM is designed to boost exports from non-traditional districts and sectors. This could help broaden the base of India’s export economy, reduce dependence on a limited set of products and markets, and generate employment across manufacturing, logistics and allied services. The emphasis on inclusivity and technology-enabled processes also reflects a longer-term vision of making India’s export framework more resilient and globally competitive.

For MSMEs, the mission represents a significant opportunity. These enterprises often operate with limited resources and face disproportionate challenges in meeting international standards and accessing global markets. The combination of financial instruments under Niryat Protsahan and operational support under Niryat Disha provides a balanced approach that addresses both immediate liquidity needs and longer-term competitiveness. First-time exporters, who may lack experience in navigating complex trade requirements, stand to benefit from the structured support offered through compliance assistance, branding initiatives and trade intelligence.

Labour-intensive sectors are also expected to gain from the mission. Industries such as textiles and leather employ millions of workers, many of whom are based in rural and semi-urban areas. By sustaining export orders and supporting diversification, the EPM could help protect livelihoods and ensure that these sectors remain viable in the face of global competition. The focus on vulnerable sectors highlights the mission’s role not only in boosting exports but also in safeguarding employment and promoting inclusive growth.

To make this scheme effective, strong execution will be crucial, together with exporters’ capacity to channel the additional liquidity into market expansion and improved competitiveness. If implemented efficiently, the Export Promotion Mission can play a decisive role in sustaining India’s export growth while safeguarding millions of jobs across vulnerable and labour-intensive sectors. The initiative represents a forward-looking step to align the country’s export framework with the broader vision of Viksit Bharat @2047.

US tariffs to hurt Indian leather industry, revenue may drop by 12%

Mumbai: The Indian leather and allied products industry is bracing for a 10–12% revenue decline this fiscal year, driven by the United States’ (US) imposition of a 50% tariff – comprising a 25% reciprocal tariff and a 25% penalty for purchasing Russian oil. The tariffs, which came into effect in August 2025, are expected to reduce export volumes by 13–14%, with export revenue projected to fall by 14–16% to $3.9–4 billion.  Finished leather products such as shoes and accessories, which fetch higher realisations of approximately $14 per unit, are particularly affected, further exacerbating the revenue loss.

“With loss of orders from the US, the export volume is expected to drop 13–14% this fiscal,” said Jayashree Nandakumar, Director at Crisil Ratings. “Revenue will be hit harder as the bulk of exports to the US is of finished leather products, which fetch higher realisations.”

The industry, which generated approximately ₹56,000 crore in revenue in fiscal 2025, relies heavily on exports, with the US accounting for 22% of the total and the European Union over 50%. The higher tariffs have placed Indian exporters at a disadvantage compared to competitors from countries like Cambodia, Italy, Vietnam, and France, where US tariffs are lower at 15–20%. Many Indian tanneries and small leather product manufacturers with significant exposure to the US market have already shut down operations.

The decline in export demand is expected to compress operating profitability by 150–200 basis points, with exporters struggling to absorb fixed costs such as salaries, leases, and maintenance. “Lower revenue and weak fixed cost absorption will compress the operating profitability of exporters by 250–300 basis points this fiscal,” said Athul Sreelatha, Associate Director at Crisil Ratings. “However, growth in domestic revenue will restrict the decline in the operating profitability of the overall industry to 150–200 basis points.”

Financial metrics are also set to weaken, with the net cash accrual to total debt ratio and interest coverage projected to drop to 0.1 times and 2.5 times, respectively, from 0.2 times and 3.7 times last fiscal. Leverage levels, however, are expected to remain stable due to reduced GST rates on intermediate leather goods and the absence of major debt-funded capital expenditure plans.

To mitigate the impact of the tariffs, exporters are exploring diversification into markets with favourable duty structures and relocating production to other regions. However, these measures are still in their early stages and will take time to yield results. The recently signed Free Trade Agreement with the United Kingdom (UK) and sustained demand from non-US markets may help limit the decline in export revenue.

In the domestic market, the reduction in goods and services tax (GST) rate on leather products from 18% to 12% is expected to enhance affordability and drive premiumisation. Combined with lower income taxes, stable inflation, and reduced interest rates, these factors are likely to boost domestic consumption. Meanwhile, the decline in export demand is expected to exert downward pressure on raw material prices, providing some relief to exporters, though not enough to offset the impact of the tariffs.

Crisil Ratings, which analysed 34 leather companies representing 12.5% of the industry’s revenue, highlighted four key factors to monitor: the evolving tariff environment, the ability to offset US revenue losses by targeting other markets, the impact of re-exported goods to Europe, and potential forex volatility.

Artificial Intelligence adoption in SMEs hinges on trust, relevance and support

Mumbai: Small and medium enterprises (SMEs) in India are increasingly aware of the potential benefits of artificial intelligence (AI), yet many remain hesitant to adopt it. Their concerns are not unfounded. For business owners operating on tight margins, the promise of AI must be matched by clear, practical value. A report titled Transforming Small Businesses: An AI Playbook for India’s SMEs, by the World Economic Forum in partnership with IndiaAI, the Office of the Principal Scientific Adviser to the Government of India, and BCG X, offers a detailed account of these concerns and outlines a framework to address them.

The report draws on extensive consultations with SME owners, entrepreneurs, industry bodies and government representatives. It reveals that while many SMEs are curious about AI, they lack the guidance to move forward. Owners often ask not what AI can do in theory, but what it can do for them specifically. They want to know which use cases are most relevant, how ready their business is, and where to find affordable solutions. Without answers to these questions, AI remains an abstract concept rather than a practical tool.

Cost is a major barrier. Many SME owners believe that AI solutions are designed for large enterprises and priced accordingly. They worry that customisation for small-scale operations is either unavailable or prohibitively expensive. As one manufacturer put it, “We need AI that plays by my margins because value is what keeps my lights on.” This sentiment is echoed across sectors, from textiles to automotive components. For SMEs, the cost of experimentation is high, and the risk of failure can be severe.

Another concern is the lack of implementation support. SME owners often feel they cannot adopt AI without expert guidance. They want professionals who can assess their operations, identify suitable processes for AI integration and help with deployment. However, hiring such experts is rarely feasible. The report suggests that a centralised AI platform could help bridge this gap by connecting SMEs with solution providers, equipment vendors and funding options. It also recommends showcasing successful early adopters to build trust and encourage broader uptake.

Digital readiness is another challenge. Many SMEs operate with minimal digital infrastructure. Their data is often recorded manually or stored in basic spreadsheets. Without reliable, structured data, AI systems cannot function effectively. The report highlights the need for foundational digital tools and training before AI can be introduced. It also notes that SMEs vary widely in their digital maturity, and any intervention must be tailored to their specific stage in the digital journey.

Workforce concerns further complicate adoption. Shopfloor workers often view AI as a threat to their jobs. They fear surveillance and replacement, and are unsure whether they can learn the necessary skills. The report emphasises the importance of responsible AI use and transparent communication. If workers see AI as a tool that simplifies tasks and enables upskilling, they are more likely to support its integration. Training programmes must be accessible and designed with the workforce in mind.

The role of government is critical. SME owners want the government to act as an ecosystem curator rather than just a subsidy provider. They call for platforms that facilitate knowledge-sharing, connect stakeholders and evaluate the effectiveness of AI solutions. Some also point to the reluctance of original equipment manufacturers (OEMs) to experiment with new processes. Without support from larger partners, SMEs struggle to implement AI even when they are willing.

Start-ups and industry representatives echo these concerns. They stress the need for AI solutions that are easy to integrate and tailored to Indian realities. Many SMEs lack the digital foundation required for advanced AI tools. Start-ups must meet each enterprise where it is, offering phased approaches and helping build basic capabilities. They also highlight the importance of clear goals. SMEs must define what they want to improve—whether it is reducing defect rates or shortening production times—before selecting tools.

The report proposes the IMPACT AI framework to accelerate adoption. It focuses on three pillars: awareness, action and recognition. Awareness involves bridging knowledge gaps and building trust. Action provides tools such as an AI maturity index and a solutions marketplace. Recognition celebrates early adopters to inspire others. This structured approach aims to guide SMEs through their AI journey, from initial curiosity to full integration.

Ultimately, the transformation of India’s SME sector through AI will require collaboration across stakeholders. Policy-makers must create enabling environments. Entrepreneurs must be willing to explore new technologies. Solution providers must offer affordable, relevant tools. And workers must be supported through training and transparent communication. The report does not promise quick fixes, but it does offer a realistic path forward—one that respects the constraints and aspirations of SMEs.

If AI is to serve inclusive growth, it must work not only for large enterprises but also for the millions of small businesses that drive India’s economy. By addressing their concerns with empathy and precision, stakeholders can help SMEs unlock the value of AI and build a more resilient, competitive future.