WTO likely to set up panel to decide on India’s sugar sops

Brazil, Australia and Guatemala have requested the World Trade Organisation (WTO) to set up dispute panels to rule on India’s sugar subsidies the second time round after India rejected the request at the last meeting of the Dispute Settlement Body (DSB) last month.

The request for dispute settlement panels put in by the three countries will be taken up at the DSB meeting scheduled on August 15. Since the second request made to the DSB cannot be rejected, panels are now likely to be formed at the WTO which will decide whether India’s sugar subsidies are valid or not.

“India tried to reason with the three complainants pointing out that all subsidies extended by the government to sugar producers were permissible under the WTO rules. However, the discussions were not successful,” a government official told BusinessLine.

Once the DSB considers the second time requests and sets up three separate panels, all sides will put forward their arguments.

According to Australia, the amount of support to sugarcane producers in India exceeds the country’s product-specific de minimis level of 10 per cent for the product

. It added that several subsidies such as the State-level export subsidy for sugar, federal-level assistance and export incentives (raw sugar export incentive scheme), and freight assistance were inconsistent with the Agreement on Agriculture (AoA) as they appeared to be export subsidies.

India’s decision to increase the Fair and Remunerative Price for sugarcane from ₹1,391.2 per tonne in 2010-11 to ₹2,750 per tonne in 2018-19 was the main reason for Brazil’s concern which also believed that making it compulsory for mills to export 5 million tonnes of sugar in 2018-19 had distorted prices in the global market.

Guatemala also had similar complaints and alleged that India’s domestic support measures for sugar are inconsistent with obligations under the WTO’s AoA, while the alleged export subsidies are inconsistent with India’s obligations under the AoA and the Agreement on Subsidies and Countervailing Measures (SCM Agreement).

New Delhi’s stand

New Delhi has consistently argued that its subsidies to sugar producers were in the form of production subsidies that were permissible under the WTO. Moreover, the subsidies to exporters were for transportation and marketing purposes which, were permitted by the WTO at least till 2022.

“We are hopeful that once the panels are set up our arguments would be appreciated and we would get a favourable judgement,” the official said.