Policy

WTO: India’s interest in promoting wheat, rice exports may clash with G-33 proposal on MSP

Amiti Sen New Delhi | Updated on September 15, 2021

New Delhi may have distanced itself from developing country group’s proposal to allow public stockholding without curbs as it disallows exports

 

India has not yet endorsed a proposal on a permanent solution for public stockholding made by the G-33 group of developing countries at the WTO despite agreeing with its key suggestion that subsidies for food security programmes should be allowed without any limits. This may be because the additional provision of not exporting from the procured stocks may hurt its economic interests, sources say.

 

“The G-33 proposal meets India’s basic interest as New Delhi, too, has been pushing for a permanent solution that will allow it to continue with its MSP programmes for food grains, such as rice and wheat, without fear of breach of limits. However, India is not comfortable with providing a commitment about not exporting from the procured stock as it may prove to be a dampner for its farm export drive,” a source tracking the matter told BusinessLine.

Permanent solution

The proposal put forward by the G-33, a group of developing countries that India has been closely associated with for many years, will be scrutinised and commented upon by WTO members at a Committee of Agriculture meet later this week. Attempts are on to arrive at a permanent solution on public stockholding, at the WTO Ministerial Conference starting November 30, that will give room to developing countries to pursue their public procurement programmes without fear of breaching limits and facing retaliation.

In its proposal on permanent solution, the G-33 has said that WTO members shall not challenge through the WTO Dispute Settlement Mechanism, the support provided by developing countries for foodstuffs while pursuing public stockholding programmes for food security purposes. This concession will be subject to the condition that countries must not export from the procured stocks except for the purposes of international food aid, or for non-commercial humanitarian purposes.

“The G-33 anti-circumvention safeguard, stating that a developing country will not export from procured stocks, has put India in a spot as it now exports both wheat and rice and its farm exports are growing. Earlier, it used to export only basmati, and hence it could argue that the exports were not from procured stock. Since, for the last couple of years, it has also been exporting non-basmati, the argument doesn’t apply. It is very difficult for it to now prove that exports are not taking place from procured stock,” said Biswajit Dhar, Professor, Jawaharlal Nehru University.

Demand for food grains

India’s exports of par-boiled rice in 2020-21 stood at $2.3 billion while its export of wheat stood at around $548 million, pointed out Dhar, adding that there is lot of demand from African countries, Malaysia and Bangladesh for food grains from the country. “India’s new farm laws promote farm exports. The country would want to consider carefully, any move that could go against export interests,” he said.

The WTO Agreement on Agriculture considers subsidy provided under MSP for public procurement in the category of trade distorting support, which has to be maintained within a fixed ceiling of 10 per cent of the value of production. India, individually and as part of the G-33, have been fighting for the flexibility to give higher MSP, preferably without any limits.

Although, a peace clause agreed to by members at the WTO’s Ministerial meet in Bali in 2013 allows developing countries to breach subsidy ceilings without inviting retaliation from other members, it is subject to numerous conditions difficult to meet. Hence, developing countries are insistent that a permanent solution to the problem, also promised in Bali, be reached at the upcoming Ministerial Conference in Geneva.

Published on September 15, 2021

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