India’s WTO dispute over sugar subsidies- Update

At the World Trade Organisation (WTO), India has lost the dispute over subsidies of sugar exports with the dispute settlement panel.

Highlights

  • The dispute settlement panel ruled against India, on a complaint filed by Brazil, Australia, and Guatemala.
  • However, this ruling will not come into effect immediately because, India will file an appeal against this report.
  • Furthermore, there is a lack of functional appellate body at the WTO. Thus, final decision on this matter will not come anytime soon.

What was the dispute?

For the five consecutive sugar seasons, in between 2014-15 to 2018-19, India had provided non-exempt product-specific domestic support to the sugarcane producers in excess of permitted 10 per cent level of total value of sugarcane production. Thus, the settlement panel report found that, India was acting inconsistently with its obligations provided under Article 7.2(b) of the Agreement on Agriculture.

India’s sugar exports

India incentivises sugar exports by extending financial support to the sector. This sector employs more than 50 million farmers in states like Uttar Pradesh and Maharashtra.

India’s view on the report

Commerce ministry noted that, there would be no impact of the panel’s findings on existing and ongoing policy measures in India in the sugar sector. It is so because, India is going to file an appeal at the WTO for protecting the interests of its farmers.

Background

Brazil, Australia, and Guatemala had requested the dispute consultations with India in 2019, with respect to the domestic support measures. Countries had alleged the export subsidies which India provides to the sugarcane & sugar producers. Following the request, a dispute panel was formed in October 2019, which issued its final report in December 2021.

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