India’s plans to boost oil production and extend WTO sugar subsidies called into question by WTO


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India’s plans to increase domestic oilseed production and reduce $ 10 billion a year in vegetable oil imports have come under scrutiny from the World Trade Organization with several members, including the United States and Brazil, expressing concern.

At a recent meeting of the WTO Committee on Agriculture, questions were also raised about a reported interest subsidy of $ 626 million to help India use sugar for ethanol production and a decision to approve $ 475.8 million worth of sugar export subsidies for marketing year. According to sources, 2020 – 21. 6 million tons of sugar should be reported.

Fears of sustainability

“Regarding oilseed production, Brazil and the United States have expressed concern about proposed policies that could lead to unsustainable production in the sector and long-term government support,” a Geneva-based official said. BusinessLine.

India has indicated in its response that concerns are premature as new oilseed policies are currently being implemented and that details on increased production and other related issues are not available at this stage, the official added.

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

The U.S. also questioned a $ 626 million subsidy for an interest subsidy to help free up overproduction of ethanol sugar and government approval in December 2020 for export subsidies of $ 475.8 million for the 2020-21 marketing year for exports six million tons of sugar.

Declaration of Nairobi

Brazil, Paraguay, Switzerland, Canada, Australia and the European Union have also asked India to explain whether these new subsidies are in line with the Nairobi Declaration, which required members to ensure that any export subsidies should have at least minimal trade-distorting effects. whether they should not squeeze out another member’s export.

Sugar export

India said that at the current stage, there is no data on the scheme for sugar and biofuels that is applied. It also declined to comment on the issue of sugar export subsidies as it is currently the subject of WTO dispute resolution.

“India is within the limits of its rights to provide subsidies for sugar exports for some time, because the WTO allows it. Also, its plans to increase oil production are based on the need to meet domestic demand and reduce import dependence and its sensitivity to global price fluctuations. There is no reason why WTO members should question this decision, ”said a Delhi-based trade expert.

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