India has not yet breached subsidy limits for food procurement at the World Trade Organisation, but is very close to doing so in rice.
Domestic subsidies notified by the country this week at the WTO shows that in rice, annual procurement subsidies were to the tune of $2.28 billion, which is 7 per cent of the value of rice production, a Government official told BusinessLine .
The WTO permits agriculture subsidies not higher than 10 per cent of the total production of a particular commodity. The subsidies have been notified up to 2010-11.
“We don’t have enough elbow room left for rice. This explains the importance that India attaches in getting a permanent solution on the issue of food security at the WTO,” Abhijit Das from the Centre of WTO Studies said.
WTO members can challenge procurement subsidies given by India under the present rules if they breach the given limits. If found guilty, sanctions can be imposed by other member nations.
In wheat, though, the notified subsidies for food procurement are negative as the procurement prices are lower than the external reference price against which subsidies are calculated. India has also notified procurement subsidies for coarse grains and cotton, which is negligible.
“This was a long-pending commitment that we had promised we would fulfil. Now that we have done so, one can see that we have not breached subsidy limits yet. But, we would definitely need to be protected in the future and hope the WTO acts soon,” the official said.
New Delhi also notified about $57 billion worth of farm subsidies that are permitted by the WTO and are not subject to caps.
India has refused to support a pact on trade facilitation at the WTO, which is being pushed by several developed countries, without a simultaneous pact on a ‘permanent solution’ to its problem related to procurement subsidies. India’s procurement programme, under which the Centre pays a Minimum Support Price (MSP) to procure certain food grains such as rice and wheat, is considered trade distortive by the multilateral organisation.
New Delhi wants the WTO to consider all subsidies given for procuring food from the poor as non-trade distorting subsidies not subjected to caps. Alternatively, it could make the reference price for calculating such subsidies more realistic by pegging it to recent years.