Australia challenges India over sugarcane support breaching WTO limits

Australia has sought clarification from India, alleging that its support for sugarcane exceeded the 10 per cent WTO limit in each of the seven years from 2018-19 to 2024-25

Australia has sought clarification from India on its domestic sugarcane and sugar policies, alleging that New Delhi's support for sugarcane exceeded the limit permitted under World Trade Organization (WTO) rules in each of the seven years from 2018-19 to 2024-25.

 

Under the WTO’s Agreement on Agriculture (AoA), India, as a developing country without a Total Aggregate Measurement of Support (AMS) commitment, can provide non-exempt product-specific support of up to 10 per cent of the total value of production of the agricultural product.

 

“We seek further clarification from India on its domestic sugarcane and sugar policies,” Australia said in a paper submitted to WTO, news agency PTI reported on Wednesday.

  

India is the world’s second-largest sugar producer and third-largest exporter, which means developments in its sugar market have implications for global prices and trade, the submission said.

 

“It appears that over the seven years from 2018-19 to 2024-25, India provided sugarcane AMS vastly in excess of the limits set out in Article 6, paragraph 4 of the AoA,” the paper read.

How Australia calculated India’s sugarcane market support

The Indian government fixes the Fair and Remunerative Price (FRP) of sugarcane for every sugar season. Australia’s submission reportedly described the FRP as an administered price that effectively serves as a floor price for sugar mills purchasing cane from farmers.

 

The submission also referred to premiums paid to farmers for higher production efficiency. In some states, farmers receive additional payments from sugar mills under State-Advised Prices (SAPs), it said.

 

Australia used these elements to calculate India’s market price support and AMS for sugarcane.

 

According to the figures cited in the submission, market price support rose from ₹1.125 trillion ($15.9 billion) in 2018-19 to ₹1.52 trillion ($17.7 billion) in 2024-25. It reached a peak of ₹1.55 trillion ($18.9 billion) in 2022-23.

 

Australia is using these calculations to argue that India’s sugarcane support exceeded the WTO’s permitted level during the seven-year period.

Not the first time Australia has raised the issue

In 2019, Australia, Brazil and Guatemala separately challenged India's measures concerning sugar and sugarcane at the WTO. The three disputes were considered by panels established in August 2019.

 

The WTO panel circulated its report on December 14, 2021. It found that India had provided non-exempt product-specific domestic support to sugarcane producers above the permitted 10 per cent of the value of production for five consecutive sugar seasons, from 2014-15 to 2018-19.

 

India appealed the panel's findings on December 24, 2021. The appeal was filed with the WTO's Appellate Body, which is currently unable to function. The panel report therefore has not been adopted by the WTO's Dispute Settlement Body.

 

The issue came up again in May 2024, when the US and Australia submitted a joint counter-notification on India's sugarcane subsidies. The two countries estimated that India's market price support for sugarcane was between 92 per cent and 101 per cent of the value of production during 2018-19 to 2021-22.

 

India disputed this calculation. It argued that the FRP and State-Advised Prices (SAPs) did not constitute market price support because the central and state governments do not purchase sugarcane from farmers. Sugarcane is purchased by sugar mills, India said. The WTO panel, however, had rejected this argument in its 2021 report, finding that market price support does not require the government to purchase or procure the product. 

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(With inputs from PTI)