India’s plans to increase domestic oilseed production and cut vegetable oil imports worth $10 billion a year has come under World Trade Organization scrutiny with several members, including the US and Brazil, voicing concerns.

At a recent meeting of the Committee on Agriculture of the WTO, questions were also raised on a reported $626-million interest subvention grant to help India use its sugar for ethanol production, and a decision to approve sugar export subsidies worth $475.8 million for marketing year 2020-21 to export 6 million tonnes of sugar, according to sources.

Fears over sustainability

“On oilseed production, Brazil and the US highlighted the concerns about the proposed policies that could lead to unsustainable production in the sector and long-term government support,” a Geneva-based official told BusinessLine .

India, in its response, indicated that the concerns were premature as the new oilseed policies were currently being implemented and that no details were available on increase in production and other related matters at this stage, the official added.

The issues raised by the US and Brazil were based on reports that India was working on a plan to reduce vegetable oil imports worth $10 billion a year through various incentives to farmers.

The US also raised questions on a $626-million interest subvention grant to help divest excess sugar production for ethanol, and approval given by the government in December 2020 for export subsidies amounting to $475.8 million for marketing year 2020-21 to export six million tonnes of sugar.

Nairobi Declaration

Brazil, Paraguay, Switzerland, Canada, Australia and the European Union also asked India to explain whether these new subsidies were in line with the Nairobi Declaration that required members to ensure that any export subsidies should have, at most, minimal trade distorting effects and should not displace exports of another member.

Sugar export

India said that it did not have data at the current stage on the scheme for sugar and bio-fuels being implemented. It also refused to comment on the matter of sugar export subsidies as it was currently the subject of WTO dispute settlement.

“India is well within its rights to give subsidies for sugar exports for some more time as it is allowed by the WTO to do so. Also, its plans of increasing oilseeds production are based on the need to meet domestic demand and reduce dependence on imports and its susceptibility to global price fluctuations. There is no reason why WTO members should be questioning these decisions,” a Delhi-based trade expert said.

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