The Hyderbad institution's chief mufti Mohammad Azeemuddin, said prawns fell under the category of makruh tahrim (strictly abominable) and urged Muslims not to consume them.
Under Islamic law, there are three categories of foods: halal (lawful), haram (prohibited), and makruh (abominable). Foods classed as makruh are then divided into two sub-categories: makruh (abominable but can be eaten) and makruh tahrim (strictly abominable and should be avoided).
The organisation later said the fatwa only applied to followers of the Hanafi school of Muslim thought and not other schools of Sunni Islam. Nevertheless, several scholars objected to the ruling, which specified that prawns are arthropods and not fish.
Another religious institution in Hyderabad, Madrasa-e-Anwarul Huda, said prawns are halal, not even makruh.
According to the USDA Foreign Agricultural Service, India's cultured shrimp and prawn production is around 426,500 million tonnes, while wild shrimp production is estimated at 450,000 million tonnes. Exports stand at around 382,959 tonnes.
India's annual per capita fish and shrimp consumption is estimated at around 6kg, which is low in comparison to the global average of around 18kg.
Prawn and shrimp consumption alone in India was estimated at around 500,000 million tonnes in 2015.
More than 70% of the fish and shrimp harvested is sold fresh; the rest is dried, smoked or processed.