Seafood Sector Boost in Budget 2026: Duty Cuts to Power Exports

Union Budget 2026 has delivered a significant policy boost for India's seafood and aquaculture industry, a critical component of the nation's 'Blue Economy' vision. Finance Minister Nirmala Sitharaman announced a series of targeted measures, including crucial reductions in customs duties on key inputs and an enhanced duty-free import allowance for processors. These steps are designed to lower production costs, sharpen the competitive edge of Indian exporters in the global market, and support the livelihoods of millions in coastal communities.

Major Customs Duty Revisions for Aquaculture

The centerpiece of the budget's support for the sector is the rationalization of Basic Customs Duty (BCD) on essential inputs for shrimp farming and processing. To directly address the high input costs faced by farmers, the government has slashed the duty on shrimp feed ingredients and broodstock. This move is expected to provide immediate relief to aquaculturists, who have been grappling with rising operational expenses and intense international competition.

Specifically, the BCD on fish hydrolysate, a critical protein component in shrimp feed, has been reduced from 15% to 5%. Furthermore, the duty on imported shrimp broodstock, essential for maintaining healthy and productive shrimp populations, has also been significantly lowered. These measures aim to make high-quality feed and genetic material more affordable, leading to better yields and improved profitability for farmers.

A Shot in the Arm for Seafood Exporters

Recognizing the challenges faced by seafood exporters, including tariffs in key markets like the US and competition from countries such as Ecuador, the budget has introduced measures to improve their cost structure. The duty-free import limit for specified inputs used in seafood processing for export has been raised from 1% to 3% of the Free on Board (FOB) value of the previous year's exports. This increased allowance provides processors with greater flexibility to source raw materials and ingredients globally without incurring import duties, directly enhancing their price competitiveness.

In another significant move to facilitate trade, the budget proposes that fish caught by Indian vessels in the country's Exclusive Economic Zone (EEZ) or on the high seas will be made duty-free. Furthermore, landing this catch at foreign ports will be treated as an export of goods, simplifying procedures and potentially opening up new logistical avenues for Indian fishing fleets.

Summary of Key Budget 2026 Announcements

Budget Proposal	Previous Rate/Limit	New Rate/Limit	Direct Impact
Duty-Free Import Limit for Processing	1% of FOB Export Value	3% of FOB Export Value	Reduced input costs for export-oriented processors.
BCD on Fish Hydrolysate (Shrimp Feed)	15%	5%	Lowers the cost of aquaculture feed, aiding farmers.
BCD on Shrimp Broodstock	30%	5%	Improves access to quality genetic stock at lower prices.
BCD on Frozen Fish Paste (Surimi)	30%	5%	Boosts value-added product manufacturing for export.

Addressing Sector-Wide Challenges

The Indian seafood industry has been navigating a difficult environment marked by a slowdown in demand and a working capital crunch. The budget's provisions are a direct response to the industry's long-standing requests for policy support. By lowering the cost of production, the government aims to help Indian exporters better compete with major players like Ecuador, which has been gaining market share globally. The measures are also seen as a way to partially offset the impact of anti-dumping and countervailing duties in the US market.

Financial Support and Infrastructure Focus

Beyond tax and duty reforms, the budget continues its financial support for the sector through flagship schemes. Allocations for the Pradhan Mantri Matsya Sampada Yojana (PMMSY) have been increased, signaling the government's sustained focus on developing infrastructure, including cold chains, processing facilities, and export-oriented hubs. Additionally, the enhancement of the Kisan Credit Card (KCC) limit to ₹5 lakh provides fishers and farmers with improved access to crucial working capital, enabling them to adopt modern farming techniques and manage their operations more effectively.

Market Reaction and Investor Sentiment

The budget announcements were received positively by the stock market, with shares of listed aquaculture and seafood processing companies like Avanti Feeds and Apex Frozen Foods registering strong gains. The rally reflects investor confidence that these policy measures will directly translate into improved margins, higher revenues, and a stronger growth trajectory for the sector. The targeted duty cuts are seen as a clear catalyst for enhancing the profitability of companies involved in feed manufacturing and shrimp processing.

Conclusion: Strengthening India's Global Seafood Position

Union Budget 2026 provides a comprehensive and targeted stimulus for India's seafood and aquaculture sector. By addressing key cost pressures, simplifying export norms, and continuing financial support, the government has laid a stronger foundation for the industry's growth. These measures are expected to not only boost export earnings but also strengthen the entire value chain, from the small-scale farmer to the large-scale processor, reinforcing India's position as a leading power in the global seafood market.