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India’s export subsidies on sugar announced last month will not exceed $80 million and is essentially designed to encourage diversification away from white sugar to raw sugar, the country has clarified to the World Trade Organisation.
This would translate into roughly 1.4 million tonne of subsidised sugar exports going by the current exchange rate and the subsidy amount of ₹3,333 a tonne. Defending its action at a recent meeting of the WTO Committee on Agriculture (CoA) where several members including Brazil and Australia attacked the sops, India said the subsidies were aimed at discouraging white sugar production of which there was a glut in the global market, a WTO official told Business Line .
While the WTO does not allow any new export subsidies, some allowance is made for marketing and transportation. There are disciplines in place for members to gradually eliminate existing subsidies.
Drawing flakComing down heavily on India at the CoA meeting last Friday, Australia said the ₹3,333/tonne incentive payment is equivalent of 14-16 per cent of the world price and threatens to seriously destroy trade as India is the third largest exporter of sugar. It demanded that India immediately discontinue the subsidies.
World’s top sugar producer Brazil asked how India could justify the subsidies since there has been no consensus to extend special provisions for developing countries.
Other members that questioned the subsidies include Colombia, the EU, Paraguay, Thailand, El Salvador, Canada, the US, Pakistan and New Zealand.
The subsidy amount of ₹3,333 of raw sugar export announced by the Cabinet last month is for exports made in February and March. Fresh calculations will be made for April based on existing exchange rate.
Rising inventoriesMeanwhile, India’s white sugar stock is on the rise.
At the beginning of the current sugar year (October-September 2013-14), stocks were at 8.8 million tonnes (mt).
Sugar output in the on-going year is expected to be 23.8 mt, according to industry estimates, against a domestic demand of 22 mt.
India said that it would notify the subsidies to the WTO soon.
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