Australia questions India’s sugar subsidy bilaterally and at WTO

NEW DELHI: Australia has raised concerns over India’s sugar subsidy dole out and questioned how the host of financial assistance measures announced this year are within the rules of the World Trade Organisation (WTO).

In its queries to the WTO, it has also asked how India intends to dispose of its planned 3 million tonnes sugar buffer stock to ensure there is no impact on the global sugar market.

Over the last one year, the government has announced a slew of measures—from doubling import duty, scrapping export duty and two financial packages comprising creation of a buffer stock and offering soft loans—to bail out its cash-starved sugar mills and cane farmers.


Besides raising the issue at the WTO, Australia, a major sugar exporter, has also held at least two rounds of meetings with the commerce department, according to an official.

India also doubled the import duty on sugar to 100% and then scrapped the export duty on it. It also made it compulsory for millers to export 2 million tonnes of sugar even as the global prices were low.

In June, the government announced a Rs 8,500-crore package for the industry, including soft loans, for creating ethanol capacity.

Another query of the Australian government pertains to making future sugar exports financially viable, given India’s record production and surplus and the gap between domestic and international sugar prices. There is a glut-like situation due to record 32 million tonnes of sugar production in the 2017-18 marketing year.

“Brazil and Thailand have also joined hands with Australia and they say global prices have crashed because of our actions. However, we are an insignificant player and the subsidy is not huge,” said another official aware of the development.

The official said these are India’s domestic measures and unlikely to impact the global market.

For the minimum indicative export quota (MIEQ), Australia has asked India to confirm the volume of sugar that was exported under the scheme, and whether the scheme can be extended till the end of 2018.

“Can India confirm whether financial assistance has been withheld from sugar mills for not exporting the prescribed quantities under the MIEQ,” it said.
Canberra has also flagged concerns on India’s market price support for sugarcane through the Fair and Remunerative Price, which was raised for 2018-19 sugar season, and sought details on state advised price announced by certain states.