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Business News/ Economy / Sugar subsidy dispute may leave India with bitter taste
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Sugar subsidy dispute may leave India with bitter taste

The WTO dispute panel is likely to announce its verdict against India in the case by 30 Sep

India incentivizes sugar exports through financial aid to the sector, which employs more than 50 million farmers in key states such as UP and Maharashtra.bloombergPremium
India incentivizes sugar exports through financial aid to the sector, which employs more than 50 million farmers in key states such as UP and Maharashtra.bloomberg

NEW DELHI : India may lose the dispute over its subsidies on sugar exports, which was raised by Brazil, Australia and Guatemala, officials indicated. A World Trade Organization (WTO) dispute panel is likely to announce its verdict in the case by 30 September, they said.

India incentivizes sugar exports through financial support to the sector, which employs more than 50 million farmers in politically sensitive states such as Uttar Pradesh and Maharashtra.

“There is not much hope of us winning the case. The report is likely to come up by end-September. But we have the option of going for an appeal and the case may linger on as there is no appellate body at present," a government official said under condition of anonymity.

India sought to delay proceedings at the panel citing supervening circumstances because of the pandemic, as a result of which physical meetings could not be held.

“Our stated position is that there has to be physical meeting because it is impacting our due process. Due to covid-19, managing inter-ministerial consultation is also a major challenge. We presented all those facts before the panel, but the panel insisted on virtual meetings because the other parties wanted it," the official said.

In 2019, Brazil, Australia and Guatemala requested WTO dispute consultations with India regarding domestic support measures and alleged export subsidies provided by India to producers of sugarcane and sugar. The dispute panel was formed in October 2019, but the chair of the panel informed the parties in April last year that because of the complex procedural and factual nature of the disputes, the panel is estimated to issue its final report not before the second quarter of 2021.

India is expected to withdraw sugar export subsidies from the new crop season beginning October as a sharp rise in global prices makes it easier for Indian mills to sell the sweetener on the world market, Reuters had reported last month, quoting food secretary Sudhanshu Pandey.

India, the second-largest sugar producer after Brazil, encouraged overseas sales for three years in a row, helping New Delhi emerge as a significant, stable exporter of the commodity.

India’s farm subsidy policies also came under the scanner at the WTO during the country’s trade policy review (TPR) earlier this year, with members such as Canada, the US and Australia complaining that New Delhi has not declared its agri export subsidies for more than eight years, while Brazil held that India’s longstanding support measures for sugar have suppressed global prices by up to 25%.

Australia, in its intervention, said it remains concerned about India’s trade-distorting agricultural policies, making global markets less predictable and more unstable.

“India’s domestic support for sugarcane and its export subsidies for sugar are of particular concern to Australia, which is why Australia has joined Brazil and Guatemala in initiating a dispute to challenge those measures," it said.

Brazil also regretted that India’s domestic agriculture reforms did not include the sugar sector. “India’s longstanding support measures for sugar and sugarcane are suppressing global prices by up to 25% and causing losses of around $1.3 billion per year. Brazil is the world’s largest sugar exporter, so these measures are especially damaging to Brazilian producers," it said.

In its response to WTO members over the concerns, India said the support given is largely to small and marginal farmers and is in accordance with its commitments at the trade body.

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Published: 17 Sep 2021, 02:09 AM IST
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