COUNTRY REVIEW

Aquaculture development in India: an economic overview

with special reference to coastal aquaculture

M. KRISHNAN* & PRATAP S. BIRTHAL†

* Central Institute of Brackishwater Aquaculture, Chennai, India

† National Centre for Agricultural Economics and Policy Research, New Delhi, India

Abstract

Coastal aquaculture emerged as a sunrise sector in India during the 1990s. It was identified as
a sector full of promise for expanding exports and for adding to foreign exchange. The sector
has more than fulfilled its promise and has more in store. This paper gives an overview of the
role and development of fisheries in general and aquaculture in particular in India. Growth,
sources of growth, contribution to national gross domestic product, impact on rural economy,
socio-economic impacts, generation of backward linkages, and export growth of coastal
aquaculture in terms of composition, direction and penetration are reviewed. The paper
concludes on an optimistic note for development of coastal aquaculture in the country with
the streamlining of policy measures for production and marketing.

Keywords: Aquaculture development, coastal aquaculture, socio-economics, environmental

issues, India.

Overview

Agriculture in India occupies a prime position in terms of its contribution to gross domestic
product and factor incomes. It accounts for 27 percent of India’s gross domestic product, 65
percent of the employment of the total workforce and 21 percent of the total exports of the
country (Venkitaramanan, 2001). The sectoral shift has been less rapid and less pronounced
than anticipated in more than 50 years of independence. Its population and poverty weigh
down the Indian economy. India’s population at the last count was over 1 billion and the
percentage of people below the poverty line around 36 percent1. While the green revolution
stopped the imports of foodgrains, problems of distribution of food and low purchasing
power of the people persist.

Correspondence Dr M. Krishnan, Senior Economist, Central Institute of Brackishwater Aquaculture,

75, Santhome High Road, R.A. Puram, Chennai – 600 028, India. Tel: +91-44-461-0311. Fax: +91-
44-433-1414. Email: mahadevak@hotmail.com.

1
Families (consisting of 4 members) below the poverty line earn on an average less than US $ 1 or 25 cents per capita per day in
India. This is about enough money only for food and insufficient for other basic needs. The Government of India estimates, using a
different yardstick of calories intake, that 330 million people are in poverty (www.members.tripod.com/tveducation).

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82 Aquaculture development in India • M. Krishnan & P.S. Birthal

Fisheries have always been a traditional avocation. Craft and gear have remained more or
less traditional despite rapid improvements in fishing technology in India. Traditional
outlooks, cultural values and insufficient penetration of institutional finance have been
responsible for low productivity of the fishers. Inland fisheries and aquaculture has made
rapid progress of late and are contributing around 50 percent of the total fish production in
the country (Krishnan et. al., 2001).
The introduction of the New Economic Policy of the Government of India in 1991 has
opened up India’s economy and has enabled rapid expansion of export market for Indian
seafood.

Fisheries sector: contribution and growth

India’s contribution to global fish production increased from 3.26 percent in 1985 to 4.41
percent in 1997 (Table 1). Compared to growth in world fish production, fish production in
India has increased at a faster rate mainly due to increasing volume of inland fish production.
In 1997, India accounted for 4.9 percent of the world inland fish production and 4.07 percent
of its marine fish production.

Table 1 World vis-à-vis India in fish production (million tons)

1985 1990 1995 1997

World
Marine 75.80 (87.60) 83.25 (83.25) 91.90 (81.39) 72.49 (59.35)
Inland 10.73 (12.40) 12.40 (15.03) 14.72 (18.61) 49.64 (40.65)
Total 86.53 97.97 112.91 122.13
India
Marine 1.73 (61.35) 2.22 (58.58) 2.70 (54.99) 2.95 (54.83)
Inland 1.09 (38.65) 1.57 (41.42) 2.20 (44.81) 2.43 (45.17)
Total 2.82 3.79 4.90 5.38
India’s share (%)
Marine 2.28 2.67 2.94 4.07
Inland 0.16 10.57 10.67 4.90
Total 3.26 3.87 4.34 4.41
Figures in parenthesis are percentages of the totals.
Source: www.fao.org.

On average its fisheries sector contributes about 0.8 percent of India’s gross domestic
product (Table 2). This has remained almost constant since 1970-71. However its
contribution to agricultural domestic product has been rising continuously (Krishnan et. al.,
2000). It increased from 1.98 percent during the decade of the 1970s to 2.74 percent during
the 1990s. This could be due to a declining share of the agricultural sector to gross domestic
product and faster growth in fisheries sector compared to the agricultural sector (Table 2).
Annual growth in gross domestic product from fisheries sector accelerated to 7.12 in the
1990s from 2.86 percent in the 1970s. In contrast, the rate of growth of agricultural gross
domestic product during these decades grew by 3.09 and 1.79 percent respectively.

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 M. Krishnan & P.S. Birthal • Aquaculture development in India 83

Table 2 Comparative contribution to GDP and growth of fisheries sector in India

Period Percent contribution to Percent annual growth

GDP Ag. GDP Fisheries GDP Ag. GDP GDP
1970-71 to 1979-80 0.81 1.98 2.86 (6.408) 1.79 (2.764) 3.39 (9.288)
1980-81 to 1989-90 0.74 2.37 5.11 (9.540) 2.89 (5.928) 5.27 (23.266)
1990-91 to 1996-97 0.79 2.74 7.12 (10.550) 3.09 (7.760) 5.85 (10.044)
1970-71 to 1996-97 - - 4.38 (20.863) 2.74 (22.954) 4.62 (39.981)
Figures in parenthesis are t-values.
Source: National Accounts Statistics, various issues, Central Statistical Organization, New Delhi.

The rate of growth in contribution of fisheries to India’s gross domestic product has
started to approach the rate of growth in its gross domestic product. This could be attributed
mainly to greater allocation of funds to fisheries sector. The fisheries sector outlay as percent
of outlay for agricultural sector over the five-year plans has been increasing continuously
(Table 3). It increased from 1.74 percent in the First Five-Year Plan to 5.49 percent in the
Eighth Five-Year Plan. Its share in total outlay during different plans has, however, varied
from 0.26 percent to 0.52 percent.

Table 3 Outlay for fisheries sector during five-year plans (million rupees)

Plan Period Total Outlay for Outlay for Share of

outlay agricultural fisheries Fisheries sector (%)
sector sector Total Agricultural
outlay outlay
First Plan 1951-56 19600 2940 51.3 0.26 1.74
Second Plan 1956-57 46000 5290 122.6 0.27 2.32
Third Plan 1961-66 75000 10680 282.7 0.38 2.65
Fourth Plan 1969-74 159020 27280 826.8 0.52 3.03
Fifth Plan 1974-79 393320 4302 151.24 0.38 3.52
Sixth Plan 1980-85 975000 66090 3711.4 0.38 5.62
Seventh Plan 1985-90 1800000 105240 5465.4 0.30 5.19
Eighth Plan 1992-97 4341000 224670 12328.2 0.28 5.49
Source: www.nic.in/ninthplan.

Fish production: structure and trends

Fish production in India increased steadily from 0.752 million tons in 1950-51 to 5.26 million
tons in 1998-99 (Table 4). Marine fish production remained the major contributor till 1980-
81. Its contribution to total fish production by 1960-61 was over 70 percent, but it declined
drastically to 61.85 percent in 1970-71. Since then, it remained almost constant till 1990-91.
In the 1990s, fish production structure underwent substantial changes. The share of inland
fisheries increased drastically reaching to 48.76 percent in 1998-99. These changes arose
from a deceleration in growth of marine fish production and a new policy perspective in favor
of inland fisheries, particularly aquaculture.

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84 Aquaculture development in India • M. Krishnan & P.S. Birthal

Table 4 Changes in structure of fish production in India

Year Total fish production Share of marine fisheries Share of inland fisheries
(m. tons) (%) (%)
1950-51 0.752 71.01 28.99
1960-61 1.160 75.86 24.14
1970-71 1.756 61.85 38.15
1980-81 2.442 63.68 36.32
1990-91 3.836 59.96 40.04
1998-99 5.262 51.24 48.76
Source: Department of Agriculture and Cooperation: Statistics at a Glance, 2000.

Since 1980-81 fish production has been increasing at a rate of 5.21 percent a year (Table
5). The inland sector contributed increasingly to the observed growth. Inland fish production
grew at an annual rate of 6.20 percent. A disaggregated view of the pattern of growth shows
acceleration in growth of inland fish production during the 1990s. On the other hand, growth
in marine fish production decelerated to 2.50 percent during 1990-99 from 3.73 percent
during 1980-90.

Table 5 Growth trend in fish production in India (percent)

Source Period
1980-81 to 1989-90 1990-91 to 1998-99 1980-81 to 1998-99
Marine 3.73 (4.302) 2.50 (4.200) 4.48 (13.992)
Inland 5.14 (13.301) 6.34 (17.558) 6.20 (37.763)
Total 4.30 (7.826) 4.19 (9.767) 5.21 (24.15)
Figures in parentheses are percentages of totals.
Source: Department of Agriculture and Cooperation: Statistics at a Glance, 2000.

Culture fisheries comprising freshwater and brackishwater fish culture is the main source
of the growth in inland sector. The share of culture fisheries in inland sector has increased
tremendously during recent years (Table 6). It increased from 43.33 percent in 1984-85 to
71.72 percent in 1989-90 and then to 84.07 percent in 1994-95. Within the culture fisheries,
the major contribution to enhanced production was from freshwater aquaculture, which
increased from about 30 percent in 1984-85 to about 65 percent in 1994-95.

Table 6 Structure of inland fish production in India (‘000 tons)

Type of culture 1984-85 1989-90 1994-95

Capture fisheries 591.7 (53.67) 396.5 (28.28) 334.0 (15.93)
Culture fisheries 511.5 (43.33) 1005.5 (71.72) 1762.7 (84.07)
Freshwater 308.3 (27.95) 779.4 (55.59) 1392.3 (66.40)
Brackishwater 203.2 (18.42) 226.1 (16.13) 370.4 (17.67)
Total inland fisheries 1103.2 (100) 1402.0 (100) 2096.7 (100)
Figures in parentheses are percentages of total inland production.
Source: Report of the working group for Ninth Five Year Plan for Fisheries.

Potential for development of fisheries

India has abundant resources for fish production. Table 7 gives details of fishery resources in
India. In the case of marine fisheries, India has 506 thousand square kilometers of continental
shelf area and 8041 kilometers long coastline. The inland fisheries resources include 171334
kilometers length of rivers and canals, 2.05 million hectares of reservoir area, 28.55 lakh2

2
A lakh equals 100,000 units.

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 M. Krishnan & P.S. Birthal • Aquaculture development in India 85

hectares of ponds and tank area, and 0.788 million hectares of beels, oxbow and derelict
water. The brackishwater area for fish production is estimated to be 1.422 million hectares.

Table 7 Fishery resources of India

Resource Unit Quantity

Marine
Continental Shelf ‘000 sq. km. 506
Landing centers No. 2333
Coast line Km. 8041
Inland
Rivers and canals Km. 171334
Reservoirs Million ha. 2.050
Tanks and ponds Million ha. 2.855
Beels, oxbow and derelict waters Million ha. 0.788
Brackishwater Million ha. 1.422
Source: Handbook of Fisheries Statistics (1996).

India’s inland resources have not been tapped to their potential. Only about 16 percent of
its freshwater area and 10 percent of the brackishwater area has been utilized for fish culture.
The productivity however is low while average productivity of freshwater aquaculture in
1998-99 was about 2.2.tons/ ha, there is a potential to raise yield to 10 tons/ha. The realized
average productivity of brackishwater aquaculture in 1998-99 was 472 kg/ha as against the
potential of about 10 tons/ha.

Brackishwater aquaculture

Brackishwater shrimp farming has been a growth area since the initiation of the process of
economic liberalization in 1991. Tiger shrimp is the main cultured species in brackishwater.
This is a high value commodity and has ample export potential. However, as indicated
earlier, the production potential of brackishwater aquaculture has remained grossly
underutilized in terms of both area and yield.

Spatial distribution of area and production

It is estimated that about 1.2 million hectares of brackishwater area is available for
aquaculture. About two thirds of this lies in the states of West Bengal, Andhra Pradesh,
Maharashtra, Kerala, Karnataka, Tamil Nadu, Gujarat, Orissa, Pondicherry and Goa (Table
8). Of the available area in these states, 47.51 percent is concentrated in West Bengal
followed by Andhra Pradesh (17.60 percent), Maharashtra (9.38 percent), Kerala (7.62),
Tamil Nadu (6.57) and Gujarat (4.41 percent).
Only 17 percent of the available area in these states has on average been developed for
aquaculture (Table 8). Though the extent of utilization varies substantially across the states,
Andhra Pradesh has the maximum percentage of its potential available area under shrimp
culture (> 50 percent). Kerala ranks second with about one fifth of the available potential area
utilized for shrimp production. West Bengal ranks third in terms of the available
brackishwater area under aquaculture. West Bengal accounts for the maximum share of
available brackishwater in these states. Thus, due to variation in utilization of available area,
the percentage distribution of utilized area varies substantially across the states.
Brackishwater is principally used for shrimp production.

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86 Aquaculture development in India • M. Krishnan & P.S. Birthal

Table 8 Potential brackishwater area, area covered, production and yield of shrimp production in
different states, 2000-2001.
State Potential Area covered Percent area Production Yield
area (ha) (ha) utilized (tons) (kg./ha)
Andhra Pradesh 150000 74220 (50.87) 49.48 53100 (54.69) 715.44
Goa 18500 930 (0.64) 5.03 970 (0.99) 1043.01
Gujarat 376000 440 (0.30) 420 (0.43) 954.54
Karnataka 8000 2980 (2.04) 0.12 2730 (2.81) 916.10
Kerala 65000 14740 (10.10) 22.68 7320 (7.53) 496.61
Maharashtra 80000 420 (0.29) 0.53 320 (0.33) 761.90
Orissa 31600 7420 (5.09) 0.02 7360 (7.58) 991.91
Pondicherry 800 Not available Not available
Tamil Nadu 56000 2540 (1.74) 4.54 3790 (3.90) 1492.1
West Bengal 405000 42210 (28.93) 10.42 21080 (21.71) 499.40
Total 1190900 145900 (100) 17.11 97090 (100) 679.33
Figures in parentheses are percentages of totals.
Source: MPEDA, 2001.

The states of Andhra Pradesh and West Bengal contribute 77 percent of the total
brackishwater shrimp production in the country (Table 8). In fact, more than half of the
shrimp production comes from Andhra Pradesh alone. West Bengal contributes 22 percent
and is followed by Kerala (7.53 percent) and Orissa (7.58 percent). The altered uneven
pattern of distribution of production compared to aquaculture area is due to differences in
yields (Table 8). Per hectare yield is the highest in Tamil Nadu (1492 kg/ha) and the lowest in
Kerala (496 kg/ha). The national yield is estimated to average 679 kg/ha. Except for Kerala
and West Bengal, the yield in other states is higher than the national average. Shrimp culture
is location specific and the interstate variation in yield maybe due to differences in agro-
climatic, soil and water characteristics, technology, socio-economic factors, development of
markets, infrastructure and institutions and so on.

Sources of growth in brackishwater aquaculture

Brackishwater aquaculture has been a part time activity in the coastal areas of the country
since time immemorial. The states of Kerala, parts of Karnataka and West Bengal practiced
traditional culture, which were quite unorganized and hence low yielding. Commercial
aquaculture started in earnest in the country with the announcement of the New Economic
Policy of the Government of India in 1991. With the aim of exploiting opportunities in this
sunrise sector, a large area was converted to aquaculture in coastal areas. Increasing returns to
scale in the initial stages led to increasing demands on land which in turn led to
intensification of culture practices and subsequently to the outbreak of the shrimp white spot
disease. This setback generated some introspection and changes in cultural practices that
finally led to the culture system settling down to an improved extensive form of culture with
a stocking density of not more than 5-8 per square meter and sustainable output levels of 1
ton per hectare.
Table 9 traces the effect of area and productivity on shrimp aquaculture since 1990-91
across states in India. At the all India level, 59 percent of total production can be attributed to
yield increases and 38 percent to area effect in 1990-91. While in 2000-01, yield effect on
production has fallen to 12.69 percent and area effect has risen to 71 percent indicating that
growth in production in earlier stages can be attributed to growth in yield and in the latter
stages by growth in area at the all India level. While the state of West Bengal has had

Aquaculture Economics and Management 6(1/2) 2002

 Table 9 Contribution of area, productivity and their interaction towards increasing production of shrimp across states 1990-1991 to 2000-2001 (1990-91=100)
a
(Percent)

State 1990-91 1994-95 1997-98 2000-21

Yield Area Interaction Yield Area Interaction Yield Area Interaction Yield Area Interaction
West Bengal 96.75 2.95 0.29 94.57 2.90 2.36 37.22 53.69 9.08 50.56 36.88 12.55
Orissa 158.40 -66.06 7.65 1815 -182.24 -1533.07 63.48 28.21 8.30 80.50 6.13 4.36
Andhra Pradesh -7.01 109.47 -2.45 -20.68 272.36 -151.68 -9.49 212.30 -102.81 -6.68 182.67 -75.98
Tamil Nadu -34.17 165.60 -31.43 -55.32 737.10 -581.68 -2.29 109.97 -7.68 -2.30 123.41 -21.11
Kerala 81.78 17.31 0.91 -1256.62 1516.79 -160.17 170.20 -92.53 22.32 153.84 -74.43 20.59
Karnataka 81.83 16.8 1.37 44.22 38.10 17.69 52.48 25.18 22.34 74.58 11.10 14.32
Goa 100 0 0 65.32 19.13 15.55 67.11 16.91 15.98 41.74 26.07 32.20
Maharashtra 73.58 23.59 2.82 -1767.23 802.96 1064.26 -237.38 156.18 181.20 -119.05 127.78 91.27
Gujarat -73.35 235.56 -62.20 -11.35 180.29 -68.93 -18.12 145.80 -27.68 -1.93 106.78 -4.85
Total 59.26 37.89 2.84 8.87 83.78 7.35 5.15 88.78 6.07 12.69 71.54 15.76
a
To measure the contribution of area and productivity towards increasing production of shrimp across the states in India, the following methodology was used (Sharma, 1977,
Mahajan et al., 1986, Krishnan et. al., 1991).

M. Krishnan & P.S. Birthal • Aquaculture development in India

P = Ao (Yn-Yo)+Yo (An+Ao)+ ∆A* ∆Y
Where: P = Change in production
Ao = Area in the base year
An = Area in the current year
Aquaculture Economics and Management 6(1/2) 2002

Yo = Yield in the current year

Yn = Yield in the current year
∆A = Change in Area (An – Ao)
∆Y = Change in yield (Yn – Yo)
Ao * ∆Y Yo* ∆A ∆A* ∆Y
------------ + ----------- + ------------
P P P
Productivity Area Interaction
contribution contrib. contribution

87
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88 Aquaculture development in India • M. Krishnan & P.S. Birthal

continuous contribution to production from yield increases, giving way to area contribution
only in the recent years, Andhra Pradesh, Tamil Nadu and Gujarat seems to have increased
their production basically from increase in area under culture. Andhra Pradesh has more than
50 percent of its potential area under culture and also contributes more than 50 percent of the
total farmed shrimp production in the country. The states of Orissa, Karnataka, Goa has
contributed consistently to production by yield increases. But the absolute contributions from
these states are quite low. Again, these states including West Bengal have weathered the
losses better than others during 1994-95, when the whole of the sector suffered from the
white spot disease.
The intensity of culture seems to have a definite inverse relationship to the stability of
shrimp production (Table 10). While Kerala, West Bengal and Orissa where some form of
traditional aquaculture was already in vogue, seem to be relatively stable in terms of area,
production and yield, the states in which aquaculture has made in-roads in the last one decade
like Tamil Nadu Andhra Pradesh and Gujarat seem to exhibit more instability (Ravisankar et.
al. 2001). Attempts at increasing production by improving yields by greater intensity of
cultivation seem to have disastrous consequences. The sector itself seems to be reaching a
natural equilibrium with the adoption of improved extensive methods of culture.

Table 10 Trends in stability in coastal aquaculture (1991-2000)

Parameter Relatively unstable Relatively stable

Production (CV %) Gujarat (60.18) Kerala (17.62)
Tamil Nadu (58.76) West Bengal (22.39)
Andhra Pradesh (49.54) Orissa (22.96)
Area (CV %) Tamil Nadu (72.18) Kerala (4.70)
Andhra Pradesh (69.32) West Bengal (10.78)
Gujarat (61.38) Orissa (19.04)
Yield (CV %) Andhra Pradesh (41.59) Kerala (18.27)
Maharashtra (40.83) Orissa (18.41)
Gujarat (34.31) West Bengal (24.95)

Coastal aquaculture and impacts on rural economy

The state of Andhra Pradesh has the largest area under coastal aquaculture in the country.
Among the districts of Andhra Pradesh, Nellore has the maximum area under shrimp and its
contribution to shrimp production of the state has been 5987 tons in 1998-99. This district
utilizes many forms of culture systems, including seawater intake system, groundwater based
culture system and creek water system. Nellore led the way for semi-intensive shrimp
farming system in the country and also has been in the forefront in the propagation of scampi
farming in the country. Patil and Krishnan (1998a) conducted a pioneering study for
evaluating the impact of shrimp farming on rural development in Nellore district of Andhra
Pradesh.
Of the 518 shrimp farmers belonging to the Kandaleru Aqua-farmers Association (KAA)
and located in Nellore, 79 percent produce on land holdings of less than 5 hectares. There are
253 small and marginal farmers operating on land holdings of less than 2 hectares in area
(Table 11). These constitute 49 percent of all Kandaleru shrimp farmers. In contrast, 108
farmers or 21 percent of all Kandaleru farmers produce on land holdings of greater than five
hectares. Of these 108 farmers, 43 or 8 percent of all KAA farmers operate on 10 or more
hectares of land.
Two hundred and eighty-five farmers or 55 percent reported that they own their farms,
81 or 61 percent reported that they lease their farm land and 152 or 29 percent reported that
they received their land through a government land transfer scheme for the purpose of shrimp
farming.

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 M. Krishnan & P.S. Birthal • Aquaculture development in India 89

Table 11 Kandaleru shrimp farms located in Nellore district by site by size of land holdings in
hectares

Land holdings size (ha)

<1 1-2 2-5 5-10 >10 Total
No. of shrimp farms 202 51 156 65 43 518
Share (%) 39 10 30 13 8 100
Source: Patil and Krishnan (1998a).

The data reveal that farm ownership status varies with farm size (Table 12). Ninety-six
percent of KAA farms operating on five or more hectares and 82 percent of those operating
on an area between one and two hectares are owned by the operators. In the case of the larger
farms, the owners are the individual farmers. In the case of the larger farms, wealthy shrimp
farmers own 71 percent and 29 percent are either corporate entities with publicly owned
shares or private limited companies.

Table 12 Ownership status of shrimp farms by size of land holdings in hectares in Nellore district

Land holdings size (ha)

<1 1-2 2-3 5-10 >10
No. of shrimp farms 202 51 156 65 43
Share % 39 10 30 13 8
Farm land owned 50 42 87 59 42
Share % 25 82 56 94 98
Farm land leased 0 9 69 6 1
Share % 0 18 44 6 2
Farm land transfer 152 0 0 0 0
Share % 75 0 0 0 0
Source: KAA database, 1997.

The majority of shrimp farmers who leased land operate on land holdings between two
and five hectares and are mostly non-natives of the Nellore district. Their motivation for
coming to this region and entry into the industry was in most cases entirely profit-driven. In
most cases, these farmers came to the Kandaleru region in 1993 with the announcement of
incentives given for export-oriented enterprises under the New Economic Policy of the
Government of India.
All the 152 farmers reporting that they received land via a government transfer scheme
were entitled to this benefit due to their classification as members of one of India’s scheduled
castes or scheduled tribes (SC/ST). Each one of them operates on a total area of less than one
hectare of land.
Patil and Krishnan (1998a) also found that shrimp farms operating on the smallest land
holdings are owned and operated by local resident villagers (Table 13).
Table 13 Share of Kandaleru shrimp farms by size of land holdings

Shares Land holdings size (ha)

<1 1-2 2-5 5-10 >10
1993 share (%) 30 9 31 18 12
1997 share (%) 39 10 30 13 8
% change in share +9 +1 -1 -5 -4
Source: KAA database, 1997.

In fact of the 202 of farms less than one hectare in size, 150 of them or 29 percent of all
KAA shrimp farms are operated by members of the Scheduled Cast/Scheduled Tribe

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90 Aquaculture development in India • M. Krishnan & P.S. Birthal

community who are considered the poorest and most deprived among those inhabiting the
Kandaleru region (BFDA, 1997). Again, the dramatic rise in the number of small farm
holdings between 1993 and 1997 suggests that shrimp farming has low barriers to entry for
small farmers. This is believed to be because small farm production has low capital intensity
and local availability of key inputs, such as feed and seed, keep variable costs relatively low.
In addition to direct on-farm employment, ancillary industries have provided
employment opportunities for both skilled and unskilled workers. It is estimated that the 33
seed hatcheries employ approximately 1650 workers; the 14 feed mills employ approximately
840 workers; the 8 processing plants employ approximately 1200 workers and the 16 new ice
plants employ approximately 400 workers in total (Table 14).
It is clear that there are strong direct and indirect employment opportunities associated
with the development of ancillary industries to aquaculture.

Table 14 Extent of ancillary industries in Nellore district and productive capacity

Ancillary Number of production/units Total capacity Number of units

industries 1990-91 1992-93 1994-95 1996-97 1997-98
(Andhra Pradesh)
Seed hatcheries 0 4 30 33 2380 142
million pieces
Feed mills 0 13 14 14 7800 Mt 28
Processing plants 0 3 6 8 24000 mt 36
Ice Plants 8 14 22 24 285 mt -
Source: BFDA, Nellore.

Shrimp farming, environmental issues and social impacts

Upsurge in coastal aquaculture activity induced by high profitability is reported to have
caused adverse impacts on coastal ecosystems and social environments (Parthasarathy and
Nirmala, 2000). Alagarswami (1995) identified adverse impacts of brackishwater aquaculture
on social and physical environments and emphasizes the need to adopt eco-friendly
technologies. A study, conducted by CIFE and CIBA (1998), concluded that shrimp farming
does more good than harm and it is not eco-unfriendly. The study found that most shrimp
farms (85 percent) were constructed in the saline shore zone and agricultural land accounted
for only 15 percent of the total. The study also found that mangrove regions were unsuitable
for establishment of shrimp farms since they were on acid sulphate soils. The salinisation of
adjacent lands to shrimp farms has been attributed to the proximity of the lands to the coastal
area and not because of the establishment of shrimp farms. Selvam and Ramaswamy (2000)
covered 120 farmers including 30 agricultural farmers who sold their lands to shrimp farmers
in Karaikal region of Union Territory of Pondicherry and studied factor shares,
decomposition of output changes, impacts of shrimp farming on asset distribution, income
generation and employment. In the case of shrimp production, the share of the operator
(surplus) was higher than the share of any other factor. Operator’s share accounted for 68
percent of the gross returns in case of brackishwater-fed farms. The details of factor shares
are given in Table 15.
But despite being a high payoff activity, intensive shrimp farming in some of the areas is
alleged to have caused problems of soil and water salinity, destruction of mangrove forests,
disease outbreak, environmental pollution and social problems such as landlessness, restricted
access of small fishermen to seacoast and conflicts between shrimp farmers and village
community. Selvam and Ramaswamy (2000) also discuss the conversion of paddy lands to
shrimp farming in the Cauvery delta of the state of Tamil Nadu. Intensive shrimp farming is
considered to be socially inefficient because of its low labor absorption capacity, compared to
paddy farming. But whether expansion of shrimp farming would lead to fall in farm

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 M. Krishnan & P.S. Birthal • Aquaculture development in India 91

employment or create additional employment opportunities would, however, depend on

whether the land to be brought under shrimp farming is paddy land or waste/ saline land. Patil
and Krishnan (1998b) used social impact index to study the severity of the social impacts of
shrimp farming in Nellore district and concluded that there was enough scope and
opportunities for solving these problems. The sustainability of brackishwater aquaculture in
the country rests on adoption of location specific suitable farming systems, appropriate
species, stocking density, cultural practices and policy support.

Table 15 Factor shares (percent ) in rice and shrimp production in Karaikal region in Pondicherry,
India

Details Rice Shrimp production

Brackishwater-fed Seawater-fed
Gross value of output 100.00 100.00 100.00
Current inputs 20.83 25.36 28.72
Capital 11.89 3.87 4.80
Labor 28.40 1.13 0.88
Residual 38.88 69.64 65.60
Land 13.56 01.48 00.79
Surplus 25.32 68.16 64.81
Source: Selvam and Ramaswamy (2000).

The shift to scampi

The white spot disease and slow decline in price of tiger shrimp have caused coastal
aquaculture to make a shift to scampi farming. It is estimated that more than 10,000 hectares
of water-spread area has been brought under scampi culture in the Nellore district of Andhra
Pradesh. Other districts in the same state such as Krishna, Parkas, East Guava and West
Guava are also taking up scampi culture on a large scale. Andhra Pradesh alone accounts for
67 percent of the total area and over 85 percent of the production of the giant freshwater
prawn. West Bengal, Orissa, Gujarat and Kerala are close behind in adopting scampi culture.

Investment pattern in aquaculture

In order to fulfill the objectives and the targets envisaged by the Planning Commission of
India, many issues require careful consideration at levels of farm, industry, in research
planning and implementation, in extension and by credit agencies which influence flow of
institutional finance (Upare, 2000).
The distribution of investment has however, been uneven across the states (Table 16).
The industry invested in maximum in the states with higher yield potential. In 1994, Andhra
Pradesh accounted for 45.57 percent of the total investment. In West Bengal 14.42 percent
and Tamil Nadu 10.52 percent. Flow of institutional finance to aquaculture also increased
substantially. The data presented however pertains to both coastal and freshwater
aquaculture.
This momentum, however, did not last long. Bad publicity saw coastal aquaculture bear
the brunt of allegations of adverse impacts on ecology and society, besides encroachment in
the coastal regulation zone, where aquaculture practices are prohibited under the Environment
Protection Act 1986. In response to a public interest petition, the Supreme Court of India in
1996 directed the concerned authorities to abolish aqua-farms in the coastal regulation zone
and to constitute an “Authority” to regulate aquaculture. Licensing was made mandatory for
establishing the aquaculture farms. This caused a furore in the sector and many corporate
firms withdrew from the arena. These developments have caused institutional financial
agencies to have a rethink of strategy and financial support for coastal aquaculture.

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92 Aquaculture development in India • M. Krishnan & P.S. Birthal

a
Table 16 Total investment in aquaculture industry in crore rupees

State 1992 1994

Andhra Pradesh 36.00 (44.38) 468.00 (45.57)
Gujarat - 80.00 (7.79)
Karnataka - 52.00 (5.06)
Kerala - 15.00 (1.46)
Maharashtra - 34.00 (3.31)
Orissa - 6.00 (0.58)
Tamil Nadu 20.06 (24.73) 108.00 (10.52)
West Bengal - 146.00 (14.22)
Other States - 93.00 (9.06)
Multi-states 25.06 (30.89) 25.00 (2.43)
Total 81.12 (100) 1027.00 (100)
a
A crore equals 10 million.
Figures in parenthesis are percentages of totals.
Source: CMIE(1994).

Seafood exports

Contribution to total exports

Seafood is one of the sources of foreign exchange earnings in India. During 1997-98, seafood
items worth Rs. 44868 million lakhs were exported that accounted for 3.45 percent of the
total value of exports (Cf. Table 17). The share of seafood in total exports has almost
remained constant since 1991-92 except that in 1994-95 when it attained its highest share of
4.28 percent. Incidentally, the shrimp production was also at its peak during this year. In fact,
the growth in shrimp production is export driven. About two-thirds of the cultured shrimp
production is targeted for exports.
Contribution of seafood exports to agricultural exports has been varying between 14 and
21 percent (Table 11). In 1993-94, it contributed 18.11 percent to the total value of
agricultural exports and increased steadily to 20.50 percent in 1996-97. This was because of
liberalized export policies. Thereafter, the share of seafood declined mainly due to decline in
production and imposition of stringent quality control measures by the importing countries.
Table 17 Contribution of seafood to India’s exports

Year Value of seafood exports Share of exports (%)

(Rs. million)
Total exports Agricultural exports
1993-94 25519 3.66 18.11
1994-95 35366 4.28 16.05
1995-96 33811 3.18 19.22
1996-97 40076 3.37 20.50
1997-98 44868 3.45 18.93
1998-99 43686 3.13 18.17
1999-00 50000+ 3.14 14.62
Source: CMIE (2000), Foreign Trade.

Composition of seafood exports

Seafood exports contributes about 3.14 percent of the value of total exports. Shrimp is the
major item of seafood exports in terms of both quantity and value. In 1998-99, shrimp
accounted for 26.11 percent of the quantity and 66.72 percent of the value of seafood
exported (Table 18). The share of shrimp in quantity has declined steeply from 58.41 percent
in 1985-86 to 26.11 percent in 1997-98. In value terms also, there has been a decline in the
share of shrimp. But since 1990-91, it has been arrested. The share of frozen/fresh fish has

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 M. Krishnan & P.S. Birthal • Aquaculture development in India 93

increased consistently over the years in volume and value. In fact, quantitatively it has
replaced the shrimp.

Table 18 Changes in composition of seafood exports (percent)

Item Quantity Value

1985-86 1990-91 1995-96 1998-99 1985-86 1990-91 1995-96 1998-99
Frozen Shrimp 58.41 35.66 35.31 26.11 82.12 66.78 69.96 66.72
Fresh Frozen fish 13.56 36.13 31.49 48.74 4.24 12.15 10.12 15.47
Frozen squids - 14.56 16.96 9.10 - 7.59 9.28 5.77
Frozen cuttle fish 5.83 9.10 11.82 9.66 2.99 5.73 7.34 6.88
Frozen lobsters 1.35 0.77 - 0.33 2.81 2.45 - 1.02
Dried Items 7.17 2.03 - 1.47 1.55 1.02 - 0.72
Live Items - 0.23 - 0.44 - 3.20 - 0.62
Others 13.98 1.47 4.39 4.16 6.30 1.08 3.18 2.80

Trend in exports
Decadal growth rates for the period 1950-51 are presented in Table 19. Since 1951, India’s
seafood export has registered an annual growth of 6.57 percent in quantity and 18.17 percent
in value, despite substantial variation in growth rates over different decades. During the
1950s, growth in quantity of seafood exported was 0.29 percent, while the value of exports
increased at a rate of 5.72 percent. During the 1960s and 1970s, the quantity as well again as
value witnessed substantial growth. But it decelerated in the 1980s and accelerated in recent
years.

Table 19 Trends in export of seafood by India, 1951-2001 (compound growth rates)

Period Quantity exported Value of exports

1950-60 0.29 5.72
1961-70 9.88 31.62
1971-80 10.65 22.91
1981-90 5.81 11.67
1991-2001 7.58 14.11
1950-2001 6.57 18.17

Product-wise growth rates in India’s seafood exports in recent years are given in Table
20. Maximum growth occurred in case of fresh/ frozen fish (21.22 percent increase in
quantity and 28.39 percent in value). Export of frozen cuttle fish/ fillets also registered
substantial growth. It may be recalled that in recent years, the share of fresh/frozen fish and
frozen cuttle/fillets has been rising continuously, while that of shrimp has been on a
downward trend. This is a matter of concern because shrimp is a high value product and has
been a priority export item. The reason perhaps could be because of heavy inventories in
destination countries and competition from other shrimp exporting countries.

Table 20 Growth trend in India’s seafood exports, 1990-91 to 1997-98 (percent/yr.)

Item Quantity Value

Frozen shrimp 7.02 (5.742) 21.87 (8.571)
Fresh / Frozen fish 21.22 (9.133) 28.39 (9.833)
Frozen cuttle fish/ fillets 17.85 (8.984) 26.68 (8.848)
Frozen squids 10.50 (3.469) 23.72 (4.648)
Figures in parenthesis are t-values.
Source: MPEDA, 1999.

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94 Aquaculture development in India • M. Krishnan & P.S. Birthal

Direction of exports
Japan constitutes the major market for India seafood. It accounts for about 45 percent of total
seafood exports of India (Table 21). The USA with a share of about 10-15 percent was the
second largest market for Indian seafood till recently. Now the United Arab Emirates is
emerging as a new and growing market for Indian seafood. Its off-take has ranged from 5-10
percent in the recent years.

Table 21 Share in total seafood exports of India by destination (percent)

1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000

World 100 100 100 100 100 100 100
Japan 44.85 43.99 41.20 42.32 46.31 47.02 41.37
USA 12.28 12.86 9.74 9.68 11.49 14.31 15.63
UAE 6.13 8.27 9.99 8.57 11.69 8.09 5.59
Source: CMIE(2000), Foreign Trade.

Share of Indian seafood in imports of Japan and USA

Competition from other seafood and shrimp exporting countries has been consistent over
time. While India had a market share of more than 15 percent of the shrimp import market of
Japan, it had only 5-10 percent of the market of USA, over the last twenty years. Thailand
and Ecuador appear to have the major market share of shrimp imports into USA in recent
years and Indonesia for the Japanese market (MPEDA statistics).

The macroeconomic outlook

It is estimated that lack of infrastructure causes a loss of $8 billion of food grains in India.
Nearly $4.5 billion is wasted in transit. An estimated amount of $22.72 billion of new
investments is required in farm infrastructure of which $5.6 billion is needed to build an
effective transportation system for maximum utilization of food grains produced (Roy, 2000).
Similarly, the contribution of marine products exports to India’s total exports and
agricultural exports could be much more than the current 3.14 percent and 18 percent
respectively if infrastructure and logistics could be improved. A careful analysis of the
sectoral allocation of funds among fisheries, livestock and agricultural enterprises revealed
that the returns to investment in fisheries was twice as remunerative as compared to
investments in these other sectors (Singh and Lal, 1990, Krishnan and Birthal, 2002).
Strengthening of handling and storage facilities at harbors and landing centers, one time
weighing of the produce to avoid contamination, streamlining production, processing and
packaging procedures in line with HACCP guidelines will improve acceptance of Indian
seafood in the international markets (Krishnan, et. al., 1999a). Out of the $1.43 billion
seafood exports achieved in the last fiscal year, the contribution of shrimp alone stood at 60
percent of the value. Backward linkages generated by aquaculture in rural areas have not only
generated more income and employment in such areas but also have contributed substantially
to the overall socio-economic improvement of the remote coastal areas (Krishnan and
Sharma, 1994). There is fledgling of a domestic market for seafood. Its turnover is just over
Rs.200 million. This market can help buffer the export market against any unprecedented fall
in earnings (Krishnan, et. al, 1999b).
The awareness of the scope and magnitude of the contribution that can be realized from
seafood sector is growing in India. The creation of the Aquaculture Authority (of India) to
govern aquaculture production strategies is hoped to offer directions in terms of technical
inputs such as location of the farm, intensity of production and integration of production and
marketing. The Marine Products Exports Development Authority (of India) under the

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 M. Krishnan & P.S. Birthal • Aquaculture development in India 95

Ministry of Commerce governs seafood trade. Production assistance and start up subsidies,
market research and development are its forte. The move to set up an independent
corporation to govern the maintenance of sanitation, hygiene, and upgrading of facilities at
the harbors with representation of all the stakeholders will go a long way in improving the
acceptability of Indian seafood in the international markets. India attracted $ 4.50 billion in
foreign direct investments (FDI) in year 2000 (Srinivasan, 2001). Aquaculture offers
enormous scope for foreign direct investments. The World Investment Report (2001) (quoted
in Srinivasan, 2001) asserts “simply opening an economy is no longer enough”. There is a
need to develop attractive configurations of location advantages” by capitalizing on the
synergy of endowments of factors of production.
Coastal aquaculture therefore offers great scope for enhancing income and employment
in India. Given the right policy prescriptions and environment, this sector can make a much
larger contribution to India’s GDP and its export earnings.

Acknowledgements

A significant part of this paper is based on the Indian Council of Agricultural Research -
Agricultural Produce (ICAR-AP) Cess Fund Sponsored project, “An economic evaluation of
brackishwater aquaculture systems in India, (1998-2001) of the CIBA, Chennai and NCAP,
New Delhi. The authors are thankful to the ICAR for funding and to Dr K. Gopakumar,
Deputy Director General (Fisheries), ICAR, New Delhi for encouragement during the course
of this work.

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