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India has managed to ward off criticism at the World Trade Organisation (WTO) for its raw sugar export subsidies by once again claiming that it has not made any payments under the programme. However, the country’s defence is unlikely to work for long as subsidy payments are slated to kick-off soon.
The Food and Public Distribution Ministry was recently sanctioned the first tranche of subsidy payment due to exporters for last year, a Food Ministry official told BusinessLine .
“While no export subsidy payments have yet been made for the period between February (when the incentive scheme had been announced) and September 2014, the Ministry has now been sanctioned ₹200 crore (around $32 million) to be paid out to raw sugar exporters for the period,” the official said.
The subsidy payments, claimed by 80 sugar mills from Maharashtra, Karnataka, Tamil Nadu and Gujarat, is likely to be paid out from March 15, according to industry officials.
Several WTO members, including the European Union, Australia and Colombia, were critical of India for announcing export subsidies for raw sugar in February last year, accusing India of going against the understanding reached at the WTO’s Bali Ministerial meeting in December 2013, which said all export subsidies would be reduced and gradually eliminated.
Since India is a major producer of sugar and also exports from time-to-time, these countries claim that such export subsidies distort the world market.
In the WTO committee of agriculture meeting last week, many countries questioned India about the recent announcement of increasing raw sugar export subsidy to ₹4,000/tonne in 2015 from ₹2,277-3,371/tonne between February and September 2014.
India’s representative reiterated the argument made in the last meeting that it was not answerable on the subsidies, as no payments had been made yet. On the EU’s question about its intention to give payments in the future, the Indian representative said it was only providing facts.
India had earlier defended its raw sugar export subsidy programme on the grounds of encouraging sugar producers to diversify from refined to raw sugar.
“This is a valid justification for our subsidy programme and we will reiterate it if our small subsidy payments are questioned,” a Commerce Ministry official told BusinessLine .
Cane arrears Last year, the Centre had announced a subsidy for exports of raw sugar up to 4 million tonnes to help the cash-starved industry clear cane arrears to farmers that have crossed ₹14,500 crore.
The Indian Sugar Mills Association estimates production at 26 million tonnes in the current marketing year, against last year’s 24.3 million tonnes. Domestic demand is pegged at 24.8 million tonnes for this year.
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