‘Shipments from the country last year did not push down global prices’

India will continue its export subsidies for sugar announced earlier this year, despite calls of a roll-back from countries such as Australia at the World Trade Organisation.

India has said that there was no evidence to suggest that the country’s sugar subsidies drive down prices even as countries opposing the decision have claimed that such subsidies distort the global market.

“We have decided not to go back on the Government’s decision to subsidise small quantities of sugar exports over the next two years. The decision was largely taken to support the domestic industry and in no way does it affect the global market,” a Commerce Ministry official told Business Line.

In a submission made to the WTO, India has pointed out that last year when the country exported sugar, global prices actually increased. “Our sugar export is too little to make a difference in world prices. In fact, last year when we exported sugar, global prices went up instead of declining,” the official said. In a submission to the WTO, India has clearly established that sugar export subsidies announced recently will not distort trade.

Last month at a meeting of the WTO’s Committee on Agriculture, Australia, Brazil and the US had expressed concerns that the ₹3,333-a-tonne subsidy on raw sugar exports announced in February would ‘seriously distort trade’.

India, on its part, assured the WTO that export subsidies would not exceed $80 million which would roughly translate into 1.4 million tonnes of subsidised sugar.

It said that the idea behind subsidising export of raw sugar was mainly to lower production of white sugar, of which there was a big surplus in the world market.

India’s white sugar stock has been on the rise. At the beginning of the current sugar year (October-September 2013-14) stocks were at 8.8 million tonnes. Sugar output in the on-going year is expected to be 23.8 million tonnes, according to industry estimates, against a domestic demand of 22 million tonnes.

(This article was published on April 14, 2014)
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