SUBSIDIES AVAILABLE FOR SUGAR

INDUSTRY

 A Rs 4,500 crore package for the sugar industry that includes

over two-fold jump in production assistance to cane growers
and transport subsidy to mills for export up to 5 million tonnes
in the marketing year 2018-19.
 Previously another package of Rs. Rs 8,500 crore announced in
June 2018.
 The industry is facing a glut-like situation because of record
production of 32 million tonnes in the 2017-18 marketing year
(October-September), resulting in a closing stock of 10 MT
 Under its 'Comprehensive policy to deal with excess sugar
production in the country', government had recommended
offsetting cost of sugarcane to sugar mills by increasing the
production assistance paid to growers at Rs 13.88 per quintal for
the 2018-19 marketing year from Rs 5.50 per quintal previous
year.
 Helped mills to export 5 million tonnes of sugar under the
Minimum Indicative Export Quota (MIEQ) during 2018-19 by
compensating expenses towards internal transport, freight,
handling and other charges.
 A transport subsidy of Rs 1,000 per tonne for the mills located
within 100 km from ports, Rs 2,500 per tonne for mill located
beyond 100 km from the port in coastal states and Rs 3,000 tonnes
per tonne for mill located in non - coastal states.
 The production assistance directly be credited into the sugarcane
farmers' account on behalf of the mills as part of the government's
measures to clear more than Rs 13,500-crore in arrears sugar mills
have towards farmers.
 These steps will enable mills to boost sugar exports and clear cane
arrears, which currently stands at Rs 13,567 crore.
 WHAT IS THE ISSUE?

 Australia took legal actions against India the WTO over sugar subsidies,
alleging that it caused a “significant downturn” in world prices and hurt
Australian producers.

 It is claimed that India has given out more than 1 billion $ in additional
subsidies for sugar producers, “which has pushed global sugar prices to a
decade low”.

 Australia claims that the subsidies, which have seen Indian sugar production
leap from an average 20 million tonnes to 35 million tonnes this year, far
exceeded the level of farmer assistance permitted under WTO rules.
 This action which is formally known as a counter notification, came
after Australia repeatedly raised the issue with India directly.

 Australia has also challenged the subsidies provided by the governments

of Andhra Pradesh, Bihar, Haryana, Karnataka, Maharashtra, Tamil Nadu,
Uttarakhand and UP to their sugarcane growers through the “state
advised price" that sugar mills in these states are required to pay.

 Australia contended that India has also violated trade regulations by

providing export subsidies to enable sugar producers to sell sugar below
its cost price in the international market.
 Australia said it appears that India has provided support for sugarcane over a 6-
year period vastly in excess of its WTO spending limits, which is fixed at 10% of the
total value of production. India has not included sugarcane or its derived products
in any of its domestic support notifications since 1995-96; thus there is no
evidence provided to the WTO from India to compare with the findings of this
paper.

 India reiterated its commitment to transparency and the fact that it was up to date
on its notifications. Support for sugar was provided to prevent producers from
resorting to distress sales. India considered that Australian counter-notification
were based on flawed assumptions and analysis which led to wrong conclusions.

 For sugar, India is a marginal player in the international market and accounts for
less than 1% of global sugar exports; in any event, MPS does not qualify as
reportable support as there is no procurement of sugar by the government. India
said it has been using a consistent reporting approach since 1995 and that the
methodology it uses is compatible with WTO rules.
 WHAT AGREEMENTS ARE BEING CITED
BY AUSTRALIA AGAINST INDIA?
 Agreement on Agriculture (Uruguay round – came into force in 1995)

This agreement represents a step to establish a fairer system to reform the

agriculture sector and to address the subsidies and high trade barriers that distort
agricultural trade that will increase market access and improve the livelihoods of
farmers around the world.

 Agreement on subsidies & countervailing measures

This agreement disciplines the use of subsidies, and it regulates the actions
countries can take to counter the effects of subsidies. Under the agreement, a
country can use the WTO’s dispute-settlement procedure to seek the withdrawal
of the subsidy or the removal of its adverse effects. Or the country can launch its
own investigation and ultimately charge countervailing duty on subsidized
imports that are found to be hurting domestic producers.
 General Agreement on Tariffs and Trade (1947)

This agreement is a legal agreement between many countries,

whose overall purpose was to promote international trade by
reducing or eliminating trade barriers such as tariffs or quotas.