Indian Farm Support Scheme Comes Under WTO Scanner

Our nation is facing increased heat at the World Trade Organisation for MSP programs on Wheat and also for sugarcane and pulses. Australia continued to raise concern over steady increase in India’s MSP for wheat. The US and the EU questioned subsidies on sugarcane and buffer stocks of pulses. They also raised concerns over price support for both Rabi and Kharif crops at the meeting of the agriculture committee recently. What makes things worse for India is the fact that while there is increased scrutiny of its support programmes, very little movement has actually taken place on a permanent solution for legitimising its food procurement subsidies as promised by WTO members.

The official said that the absence of a permanent solution on the treatment of procurement subsidies makes India vulnerable when countries point fingers at its domestic programmes. If procurement subsidies continue to be classified as trade-distorting and the method of its calculation is not rectified, India could breach the cap of 10 per cent of farm production when its food security programme is fully implemented. Other countries could then drag India to dispute on the issue. While New Delhi managed to get a peace clause inserted in the rules at the Ministerial meet in Bali in December 2013 stating that there won’t be any action taken against India’s procurement subsidies till a permanent solution is reached on the matter, there are several conditions attached to it that might render the clause ineffective.

The official also said while developed countries’ scrutiny of our farm support programmes is on the rise, there is not much interest on resolving the issue of legitimisation of such subsidies despite the fact that the year-end deadline is drawing near. Drawing attention to India’s MSP programme on wheat at the agriculture committee meeting, Australia said that wheat prices have been declining in recent years and any wheat trade policies that could affect world prices deserved close attention.

By BOA Bureau