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29 March 2023: India on target of WTO for avoiding questions on MSP subsidy

Context: India has come under fire from the World Trade Organization (WTO) for evading questions raised by members on the Minimum Support Price (MSP) programs for food grains, especially rice, where subsidies have breached prescribed limits. Some countries have alleged that India did not respond adequately to the concerns raised by them during the consultations.

Background: According to sources, members like the US, Australia, Canada, the European Union, and Thailand told the WTO Agriculture Committee meeting that India should answer questions on its public stockholding (PSH) programs in the committee. However, India stood by its stand and insisted that it provided the best possible information and clarifications in consultation with interested members based on the available information. It was also said that some of the questions raised had already been addressed in earlier replies.

Peace Clause

  • India’s MSP programs are under scrutiny at the World Trade Organization as it seeks to justify exceeding its 10 percent limit (of the total value of rice production) for rice support in 2018-2019 and 2019 using Bali ‘peace clauses. The first country to implement is 2020.
  • While the ‘peace clause’ allows developing countries to breach the 10 percent limit without legal action being taken by members, it is subject to onerous notification requirements and a number of conditions, such as not distorting global trade or affecting the food security of other members. is under the
  • WTO members, including the US, have been accusing India of habitually not including all required information in its notifications.
  • Some members had earlier pointed out that it was mandatory to report all public stockholding programs under the ‘peace clause’, but India was not doing so, and the country did not have an adequate monitoring mechanism to ensure that no stock was exported.

Is there any obligation on the part of the Government of India to notify any stockholding program?

  • New Delhi had said it provided data on the value of production (VoP) for several crops and was under no obligation to notify any public stockholding program other than the one for the crop where the subsidy cap was breached.
  • During the meeting of the Committee on Agriculture, the US, Brazil, Canada, Ukraine, Thailand, the European Union, and Australia informed the Committee of all the questions they had raised in their individual consultations with India and asked the country to respond to the Committee. Must give and not avoid questions.

What is the ground reality of stockholding?

  • India, however, said it was not bound to give a written reply as consultations are generally oral exchanges and it had provided information and clarifications to the best of its ability, the source said.
  • “India also said it could provide further clarification on the remaining concerns of members by submitting a corrigendum to its Bali annexation notifications,” the source said.
  • Countries that raised concerns said they were disappointed with India’s response, and some said they were waiting for New Delhi to confirm the second round of consultations with members.