WTO asks India to remove raw sugar export subsidy

A few WTO members, including Australia, have asked India to remove immediately the export subsidy of Rs.3,300 a tonne on raw sugar, saying it distorts the global trade.

This demand was raised in the recent meeting of the Agriculture Committee of the World Trade Organization (WTO) in Geneva.

“India’s new support programme for sugar sparked comment among a number of delegations with some urging India to remove immediately what they described as export subsidies that will potentially impact world trade,” the WTO said. On March 3, the Central Government notified export subsidy of Rs.3,300 a tonne on raw sugar shipments undertaken during the February-March of this year.

The WTO said that discussion was about one of 31 sets of questions and answers, a key part of the agenda of the committee, whose major responsibility was to oversee the present Agriculture Agreement and members’ commitment to agriculture.

“The largest number of comments from delegations was on India’s sugar programme. The topics that also aroused interest included…India’s domestic support for rice and wheat and its food security programme,” it added.

Australia, Colombia, Brazil and the EU asked India about a new policy announced in February, involving incentive payments to Indian sugar exporters. Members sought to know the legal basis for extending the export subsidy under the WTO regime. Several of the members also pointed out that India had agreed not to subsidise its exports.

In its reply, India said the policy was designed to encourage diversification away from white sugar to raw sugar and that no intervention payments had been paid yet.

“Export subsidies will be notified to the WTO,” India said. Australia claimed that the Rs.3,300 a tonne incentive payment was the equivalent of 14-16 per cent of the world price.

Since India is the third largest exporter of sugar, “this threatens to seriously distort trade”, Australia said, and asked India to “remove the export subsidies immediately’’.