India has planned to increase its oilseed production and, eventually, cut down on its vegetable oil imports worth $10 billion annually. This plan has come under the scrutiny of World Trade Organization (WTO), as several members, which include Brazil and the US, have expressed concerns over India's decision.
A Geneva-based official said, "On oilseed production, Brazil and the US highlighted the concerns about the proposed policies that could lead to unsustainable production in the sector and long-term government support."
In a recent WTO meeting of the Committee on Agriculture, members raised questions over India's decision and on a report that talks about $626 million interest subvention grant to aid India in its use of sugar for production of ethanol. The decision to approve sugar export subsidies at value of $475.8 million for 2020-21 for the export of 6 million tonnes of sugar has also raised eyebrows.
In response, India said that the concerns were premature. The new oilseed policies are currently in force and no details of production increase and such matters are available at present.
The European Union, Brazil, Switzerland, Australia, Canada, and Paraguay have asked India to clarify whether the new subsides complied with the Nairobi Declaration that mandated members to ensure export subsidies have the least trade distorting effects and not affect trade of other members.
India has not yet commented on the sugar export subsidy matter, as it is, at present, the subject of dispute settlement of WTO. According to trade experts, India has the right to provide subsidies for its sugar exports for a certain duration. This is permitted by the WTO.
Moreover, India's decision to increase its oilseed production is to meet its domestic demand and to decrease dependence of imports. Every country has the right to increase their production. There is hardly a substantial reason for WTO members to question such decisions of a country.
