Australia seeks clarifications from India on sugarcane, sugar policies: WTO communication

New Delhi: Australia has sought clarifications from India on its domestic sugarcane and sugar policies, saying New Delhi appears to have provided cane support far above the limit allowed under WTO rules in seven years from 2018-19 to 2024-25.

Under the WTO's (World Trade Organisation) Agreement on Agriculture (AoA), such support is capped at 10 percent of the total value of sugarcane production.

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Under a provision of the agreement, "we seek further clarification from India on its domestic sugarcane and sugar policies. Historically, as the world's second-largest sugar producer and third-largest exporter, dynamics in India's sugar market have significant implications for both prices and trade in the global market," according to a paper submitted by Australia to the WTO.

Australia is ready to engage in discussions with India and other WTO member countries on the significance of India's market price support and resulting AMS (aggregate market support) for sugarcane, it added.

"...it appears that over the seven years from 2018-19 to 2024-25, India provided sugarcane AMS vastly in excess of the limits set out in Article 6, paragraph 4 of the AoA (10 per cent of the total value of production of sugarcane)," it said.

Each sugar season, the Government of India sets the fair and remunerative price (FRP) for sugarcane, it added.

The FRP is an administered price that effectively acts as a floor price for sugar mills to pay farmers for sugarcane.

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"In addition, farmers are paid premiums for increased production efficiency, and farmers in some states are eligible for additional payments by sugar mills under specific state-level support, known as State-Advised Prices (SAPs)," according to the paper.

As per data provided by Australia, the market price support increased from Rs 1.125 lakh crore (USD 15.9 billion) in 2018-19 to Rs 1.52 lakh crore (USD 17.7 billion) in 2024-25, peaking at Rs 1.55 lakh crore (USD 18.9 billion) in 2022-23.

Australia is using these calculations to argue that India's sugarcane support has exceeded the WTO limit by a significant margin.

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