WTO food subsidies cap not to be breached, says India

The Union government is confident it will not breach the existing ceiling on food subsidies agreed to at the World Trade Organization.

According to WTO rules, the amount of such subsidies given by member-countries is calculated on the external reference prices of 1986-88.

The Indian government has demanded that the year be changed to a more recent period, taking into consideration the rise in food prices and rate of inflation.

“As far as breaching the 10 per cent ceiling is concerned, we are not at default and not going to be, in the next few years to come.

"If we were to account for inflation, the increase in minimum support price since 1986-88, we would be in negative as far as subsidies is concerned,” said a commerce department official who did not wish to be named.

The official also highlighted that India have never demanded elimination of the 10 per cent ceiling.

According to WTO’s Agreement on Agriculture, developing countries such as India can provide subsidies of up to 10 per cent of the total value of production of the particular products.

In India’s case it is cereals and pulses.

“India never said it wants to eliminate 10 per cent ceiling. . .We provide per capita subsidy less than $200 compared to $50,000 in US,” the official added.

As far as the ‘Peace Clause’ is concerned,

the government has indicated it will not use the measure.

This is because, as per the Bali Ministerial Declaration, in order to use the so-called ‘Peace Clause’ or the interim measure, the government has to notify the subsidies.

According to WTO’s Agreement on Agriculture, developing countries like India can provide subsidies of up to 10 per cent of the total value of production of particular products. In India’s case, it is cereals and pulses.

“India has never said it wants to eliminate the 10 per cent ceiling. . . We provide per capita subsidy of less than $200, compared to $50,000 in the US,” the official added.

In Chennai, commerce and industry minister Nirmala Sitharaman said the government was hopeful of a positive outcome to the public stockholding issue when the WTO resumes talks on these and allied issues next month.

“It is important for us to understand that we definitely believe that the Bali agreement (on trade facilitation, which India has linked to progress on the food subsidy issue) will have to be implemented.

"But there is a course correction which is required the national interest.

"It is necessary to have public stockholding of foodgrains, as poor farmers will have to be given protection.

"That is the point we have raised. Therefore, it is important to engage with WTO and I'm hopeful we will get some good outcome,” she said.

(With inputs from T E Narasimhan)