WTO raises question on sugar subsidy

Brazil, Columbia, Australia, EU opposed move

Geneva-based World Trade Organization (WTO) has raised questions over India's move to subsidise export of sugar. WTO member countries such as Brazil, Columbia, Australia and the European Union (EU) have especially expressed concerned at the WTO's Committee on Agriculture.

The issue was raised in the successive meetings of the WTO Agriculture Committee in March and June. But none of the members have threatened to take it up with the Dispute Settlement Body of the WTO.

"India has been questioned in the WTO's Committee on Agriculture but no penal action has been initiated. India explained in the WTO that the aim of the government intervention is to facilitate payments of outstanding arrears to farmers by the sugar mills and product diversification by incentivizing raw sugar production," minister of state (independent charge) for commerce and industry Nirmala Sitharaman told the Lok Sabha today.

She said the scheme, which was notified in March this year, provides an incentive on marketing and promotion services of raw sugar production and that it will be reviewed before the commencement of the next sugar season 2014-15.

She added that Brazil, Columbia, Australia and EU have also sought information on various tenets of the scheme under which the government had notified an export subsidy of Rs.3,300 a tonne on export of raw sugar of up to 4 million tonnes during the period February - March 2014.

Under the global trading rules, offering additional support in the form of the subsidy to the export of a particular commodity is prohibited as it results in price distortion in the international markets.

Apparently, the food ministry has moved a cabinet note to discontinue the scheme by September this year since only a handful of sugar mills are utilizing the scheme.

During the first six months of the marketing year 2013-2014, India is recorded to have exported 17.5 lakh tonne of raw sugar.

In a written reply to the Lok Sabha, Minister of State for Food and Consumer Affairs Raosaheb Patil Danve, stated that India exported 17,53,840 tonnes during the October 2013 and March 2014 period.