Ahead of a meeting of the WTO’s committee on agriculture on June 25-26, countries have submitted questions on various farm policies adopted by India, purportedly with an aim to gauge if these are trade-distorting and can be challenged at the multilateral body.
India’s plans to double farmers’ income by 2022 and the PM-Kisan scheme are amo-ng a clutch of interventions that have come under the heightened scrutiny of various World Trade Organization (WTO) members, including the EU, New Zealand and the US, in early signs of potential trade tussle.
The EU now wants to know how India plans to double farmers’ income and “allocate spending of Rs 25 lakh crore on agriculture and rural development”. “How will this (doubling farmers’ income) be done taking into account global market prices of produce and measures put in place to prevent excess production?” it asks.
Ahead of a meeting of the WTO’s committee on agriculture on June 25-26, countries have submitted questions on various farm policies adopted by India, purportedly with an aim to gauge if these are trade-distorting and can be challenged at the multilateral body. New Zealand asks how income-support programmes like PM-Kisan (under which farmers are offered Rs 6,000 per year each) will “support the replacement of existing subsidies that India provides on agricultural inputs”. “How will India transition from providing indirect to direct income support for its small holder farmers?” it asks.
The US seeks a reply on India’s 5% export subsidy for non-basmati rice and how it will ensure that wheat stocks with FCI and others “do not enter international markets at prices less than procurement prices”. It also noted the Indian government’s growing procurement of wheat despite back-to-back record harvest.
The US as well as Australia sought details of India’s new “transport and marketing assistance” for farm exports, with Australia saying such an export subsidy should be phased out in accordance with the decision at the Nairobi ministerial.
The potential of trade tussles for India seems to be growing. The US had last year told the WTO that India had under-reported the massive support it offered to its wheat and paddy farmers to the multilateral body and its dole-outs far exceeded the permissible limit. It had also dragged India to the WTO, claiming that New Delhi offered illegal export subsidies and “thousands of Indian companies are receiving benefits totaling over $7 billion annually from these programmes”. Countries like Brazil, Australia and Guatemala have initiated disputes against India’s sugarcane subsidies. Many of them claim India’s subsidies are well above the limit set by the agreement on agriculture, which is 10% of the value of production for every product.
For its part, India has criticised the US 2018 Farm Bill, saying it benefited not just farmers, but also their kith and kin. The Farm Bill of 2018 has provisions that are intended for the benefit of family farms such as the inclusion of ‘first cousin, niece, nephew’, in the pool of potential family members that qualify for subsidies under the Bill. The Bill also permits farmers’ children and spouses (without ever having set foot on the farm) to count as “actively engaged” in farming, thus qualifying them for $125,000 worth of subsidy payments.
India, along with Australia, Canada, China, the EU, New Zealand and Ukraine, queried US president Donald Trump’s $16-billion “market facilitation package”. In May, the US declared the $16-billion trade aid programme for American farmers that included a three-pronged trade aid package for those farmers who had been hurt by the US-China trade war. China said the package may breach the “product specific” ceiling of 5% of the value of production, allowed under the WTO framework.