India can invoke peace clause if food subsidies disputed

1NEW DELHI: India can invoke the peace clause that grants immunity to its food procurement programmes in case any country takes its farm subsidies to dispute. A recent ruling of the World Trade Organization (WTO) against China saying that it provided trade distorting support for its grain producers and questioning the methodology of calculating its subsidies is damaging for India as well.

Brazil and Australia have requested WTO dispute consultations with India regarding domestic support measures and alleged export subsidies provided by India to producers of sugarcane and sugar.

“This is a damaging ruling because though this doesn’t apply to us, any country can take us to dispute. Our eligible production has been challenged for sugar,” said an official. The US had complained in 2016 that China had paid its farmers too much for wheat, Indica rice and Japonica rice in 2012-15 and that its trade-distorting subsidies went beyond the permitted level of up to 8.5% of the total value of production. While India and China calculate “eligible production” as procurement by the government, the US has taken total production as the basis. “We have not breached the de minimis level…We are still in consultations,” said another official.


The peace clause protects India’s food procurement programmes against action from WTO members in case the subsidy ceilings—10% of value of food production in India’s case—are breached.