Commerce and Industry Minister Piyush Goyal on Tuesday said the minimum support price (MSP) operations being conducted by the country are completely compliant with the rules of the World Trade Organisation (WTO).
"We have a Peace Clause under which for our public procurement purposes, we are permitted to buy from the marketplace and the MSP operations that we are currently doing are completely WTO compliant," he told reporters.
The minister was replying to a question whether MSP is WTO compliant as certain members of the WTO have alleged that the MSP given by India is distorting market conditions and the government has told the protesting farmers that MSP will continue.
Under the global trade norms, a WTO member country's food subsidy bill should not breach the limit of 10 per cent of the value of production based on the reference price of 1986-88.
In the Peace Clause, WTO members agreed to refrain from challenging any breach in the prescribe ceiling by a developing nation at the dispute settlement forum of the Geneva-based organisation. This clause is there till a permanent solution is found to the food stockpiling issue.
Speaking on the matter, Commerce Secretary Anup Wadhawan said that India's subsidies are within the WTO limits and subsidies of developing countries are moderate compared to the developed world.
"Our MSP programmes are WTO compliant. They are within the 10 per cent de-minimis level that we are allowed by way of agricultural subsidies and to the extent because of public procurement for food security, if we exceed our de-minimis, we have the Peace Clause," Wadhawan said.
He said that subsidies do cause distortions but distortions caused by developing countries are of minimal quantum compared to "what the west does".
Thousands of farmers, mainly from Punjab, Haryana and Western Uttar Pradesh, have been protesting at Delhi borders for more than two months seeking repeal of three laws and a legal guarantee for the MSP.
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