WTO members question India's sugar subsidy

Countries have expressed concern that minimum support price and public stock holding programmes could impact them through exports

Some members of the World Trade Organization (WTO), including Australia, the European Union (EU) and Pakistan, have raised questions over India’s export subsidy on sugar.

Thailand, New Zealand and Colombia have also expressed concerns at the WTO’s Committee on Agriculture.

“India was asked about its export subsidy programme for sugar, with Australia, Thailand, the EU, Pakistan, New Zealand and Colombia, saying they were concerned at a time when members had agreed (at Bali) to reduce and eventually eliminate these types of subsidies,” the WTO said.

“It (India) said no incentives have been paid to producers so far,” the WTO added.

Earlier in July, too, a few members had raised similar questions.

In February, India had announced a subsidy for export of raw sugar up to four million tonnes to help the cash-starved industry clear sugar cane arrears to farmers. The subsidy scheme ended in September 2014.

It was originally fixed at Rs 3,300 a tonne for February-March and the Centre had decided to review the quantum of subsidy every two months.

Under the export incentive scheme, India had exported 700,000 tonnes of raw sugar in 2013-14 marketing year (October- September).

Sugar production of India, the world’s largest producer after Brazil, has increased by 22 per cent to 560,000 tonnes till November 15 of the current financial year as compared with 462,000 tonnes in the year-ago period, according to the Indian Sugar Mills Association (Isma).

The government has pegged overall sugar output at 250.5 million tonnes for the season, while Isma had estimated the production at 25-25.5 million tonnes.

The production estimates for the current marketing year are higher than 24.4 million tonnes produced in 2013-14.

“Its spending on price support programmes, for instance, falls under the limit of 10 per cent of the value of production — a limit on trade-distorting domestic support allowed generally to developing countries when they don’t have their own separate commitments,” it said.

Some of the questions being raised by members include “why India notified its support in US dollars instead of rupees”. Some members expressed concern that minimum support price and public stockholding programmes could impact other countries through exports.