Export Performance of Indian Shrimp to European Union under proposed Free Trade Agreement: An Ex-ante Assessment

presentationShrimp is one of the largest traded commodities in the world and account for about 50 percent of total export of marine products (3.5 billion US $) from India in value term during 2012-13. The European Union (EU) is the second largest buyer of Indian marine products with a share of 22% in value term during 2012-13. An attempt has been made to analyse the performance of Indian shrimp exports to the EU and the likely impact of the proposed Free Trade Agreement (FTA) between India and EU. The study is based on data collected from UN COMTRADE statistical database of UN and The World Integrated Trade Solutions (WITS) of World Bank pertaining to 2000-2012. To analyse the performance of Indian shrimp exports, share and trade intensity index were calculated. SMART model (an application of partial equilibrium model) was used to assess the likely impact of FTA. The study revealed that Indian shrimp exports to EU has reached the all- time high of 0.4 billion USD in 2011. The trade intensity index of 4.12 showed India’s trade of Shrimp and prawn were four times more intense with EU compared to other trading destinations. SMART model simulations revealed that in case EU imposes a tariff of 5.92 percent, Indian shrimp exports will gain 65.40 million USD with 30.80 million USD trade creation effect and 34.60 million USD of diversification effect. In case of zero tariff, Indian shrimp exports will gain 0.12 billion USD with trade creation and diversification effect of 0.05 and 0.063 billion USD respectively.Under post-FTA situation, India will gain more share of EU import of Shrimp at the same time Ecuador and Argentina will lose the most. Though EU will lose huge amount of tariff revenue from India under FTA, the loss (1.3 million USD at 5.92% tariff and 2.2 million USD at no tariff), will be compensated by equally huge gain of consumer surplus in European Union