Seafood exports are down 15% owing to a depressed global market, while domestic inflationary pressures are driving production costs up by as much as 25%.

Ilias Seit, secretary of the Seafood Exporters Association of India says, "The Indian seafood export market has come down from Rs 8,200 crore to Rs 7,300 crore. Marine exports have declined by 15% in terms of quantity and by 12% in terms of value."

As a result, India has seen a negative growth rate of 11% in terms of marine exports in 2007-08. The country's low cost advantage is now being eroded as input costs have increased by 25% due to higher freight, power, labour and infrastructure expenditure. Haji Yakub owner of West Coast Foods in Porbandar, says, "Our cost of production has gone up by 20% while internationally prices of seafood products have dipped by 25%."

Gorachand Mohanty president of Orissa's Seafood Exporters Association said, "Total marine exports in Orissa have gone down from 420 crore in 2006-07 to Rs 400 crore last year. Seafood exports for the entire country are expected to come down by 30% in the current fiscal year." P Padmanavan, GM at Falcon Marine Exports in Bhubaneswar, says, "Our net realisation has come down by 20%. People are in a saving mood rather than spending mood."

Globally, India faces tough competition from China, Vietnam, Thailand and Indonesia. Demand for black tiger shrimp, which constitutes 54% of India's marine exports, has declined by 18% in the world market, and its price has come down from 11$ to 10.6$. The US, Japan and other European nations have begun importing cheaper vannamei shrimps from China, Thailand and Vietnam.

Expressing his concern, Aditya Dash CEO of Ram's Assorted Cold Storage Limited said, "The production cost for a kg of vannamei shrimp is 40% less than that of black tiger shrimp while the market price of black tiger shrimp is 25% higher. In addition to this, Free Trade Agreements like the one signed between Japan and Thailand make it very difficult for us to compete with our Thai counterparts."

To make India's seafood exports more competitive, the government has provided certain benefits to the exporters. One of them is the Duty Entitlement Passbook Scheme (DEPB), under which 8% credit on duty payment is provided to exporters. However, this credit will be reduced to 5% from September. WTO has abolished anti-dumping duties levied by the US on Indian seafood exporters. Recently, the government has also decided to allow scientific cultivation of vannamei shrimps in India.

For now it's up to the exporters to bring in better farming methods and operational efficiencies to stay competitive, says Seit, "Indian exporters need to follow cost cutting techniques and more structured monitoring processes, and enhance their competitiveness in terms of international standards."

Some like West Coast Foods' Yakub are turning their attention to the domestic market. "We have incurred huge losses, which has ultimately forced us to close down our exports and divert our supply to domestic market. Our domestic sales have almost doubled," says Yakub.