As India’s agri export grows to record level, so do objections at WTO
India may have circumvented global supply and shipping bottlenecks due to the pandemic, raising agricultural exports in 2020-21 to a record level, but a battle in the World Trade Organisation awaits, as a clutch of advanced economies has raised objections to its farm subsidies.
India exported farm produce worth $32.5 billion in 20-21, just a touch below the all-time record of $32.7 billion achieved in 2012-13. But along with exports, opposition to India’s export prowess has also increased at the WTO, especially from Australia, the EU and the USA, which argue India’s exports are contingent upon subsidies in excess of peer and advanced economies.
India is also handling a major dispute against sugar subsidies raised jointly by Brazil, Australia and Guatemala. Experts say the government now faces a tricky balance maintaining both agricultural exports and subsidies.
Despite staggering shipping delays around the world, India managed to become the top food exporter to the 22-nation League of Arab States for the first time in 15 years. It now accounts for 8.25% of the total agribusiness products imported by the 22 League members last year, higher than Brazil’s 8.15%, ending a 15-year advantage for the South American country, according to data from the Arab-Brazil Chamber of Commerce.
According to the chamber, India’s edge lay in quickly shipping food products to Arab states beating pandemic-related disruptions to global supply chains. India is now capable of shipping fruits, vegetables, sugar, grains and meat to these countries in about a week’s time whereas Brazilian shipments to Saudi Arabia now take up to 60 days.
Official data from the ministry of commerce show that agriculture exports from India registered a sharp increase of nearly 25% in 2020-21 over the previous year. This increase came even as India’s total exports had dropped by over 7%. The share of agriculture in the total exports exceeded 11%, the highest on record with the export boom led by cereals, vegetable oils and sugar and molasses.
While India continues to expand agri export, opposition from a club of advanced economies at the World Trade Organization (WTO) is getting shriller. Last month, in a session on the WTO’s Committee on Agriculture, Australia, the European Union and the USA formally petitioned the multilateral trade body that India’s exports of major agricultural commodities were driven and sustained by its farm subsidies.
“These nations argued that India would not have been able to expand its exports without government support to its producers,” said Delhi-based trade economist from Jawaharlal Nehru University Biswajit Dhar.
India’s sugar subsidies are also increasingly being opposed. According to Dhar, their main contention is that India’s exports and subsidies to cane growers fall foul of several provisions of the WTO’s Agreement on Agriculture (AoA) and the Agreement on Subsidies and Countervailing Measures. “A fierce diplomatic battle lies ahead at the WTO. A lot will depend on how India handles these objections but it is clear that India is unlikely to cut subsidised food to the poor,” said Abhishek Agrawal, an analyst with Comtrade.
In a couple of months, India will have to formally respond to the objections. The union government is preparing a detailed response on its stand, and is looking to draft in several top trade economists for their inputs said an official said requesting anonymity. That response then will now be pivotal for the future of the country’s agricultural exports.