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India prevents setting up of DSM for sugar subsidy at WTO

Despite requests from Australia, Brazil and Guatemala, India has blocked the proposal to set up dispute settlement panels at WTO against its subsidies for sugar and sugarcane. New Delhi has consistently maintained that its programmes have been in tandem with WTO obligations and coaxed the three countries to continue talks to arrive at a mutually agreed solution. However, if the three countries reinstate their demand for the set up of a dispute settlement panel at their upcoming meeting on 15th August, India has no choice (under the WTO framework) but to succumb to their demand.

The main bone of contention is that the amount of support given to agricultural producers is in excess of India’s product-specific de minimis level of 10 per cent for sugarcane. In addition, subsidies such as the state-level export subsidy for sugar, federal-level assistance and export incentives (raw sugar export incentive scheme), and freight assistance seem inconsistent with the Agreement on Agriculture.