At a recently held multilateral meeting at the World Trade Organization (WTO) in the backdrop of a decline in global trade due to COVID-19 pandemic, member countries questioned each other on protectionist policies.
India was also questioned by the US, the European Union (EU), and New Zealand about its domestic support policies on agricultural items like pulses and sugar.
"EU, US, Brazil and some more countries questioned India on its farm policies, like restrictions on pulses, sugar subsidies, and export subsidies that have been made available through various kinds of schemes," a senior government official, aware of the deliberations, told Moneycontrol.
For the marketing year 2018-19, India breached the subsidy limit for rice and was the first country to invoke the peace clause. India produced rice worth $43.67 billion in 2018-19 and it gave subsidies worth $5 billion, India had informed the WTO. For developing countries, the support limit is 10 percent of the value of production.
"So the countries also asked if India was breaching the support limit for other farm products like it did in case of rice. Overall, India was questioned on its domestic support policies," the official said.
India has a transport and marketing assistance scheme for specified agriculture products which provides assistance for the international component of freight and marketing of agricultural produce. This assistance aims to mitigate the disadvantage of higher cost of transportation of export of specified agriculture products due to trans-shipment.
"This scheme was also pulled up. But we are compliant with the Nairobi Ministerial (Decision). It allows developing countries to give export subsidies (under Agreement on Agriculture) till the completion of 2023 and we have made our stance clear to them," the official said.
These countries also said that India must remove import restrictions on peas, lentils, beans and other pulses that it extended till March 2021, as it no longer counts as a temporary measure.
The US too was pulled up by India, along with countries like EU, New Zealand and others, who questioned the US on subsidies that it provides to its farmers. These countries pointed out that the total quantum of support provided by US breaches the WTO ceiling for US on agricultural products.
US' total support amounts to $34 billion, much higher than its commitment to the WTO of being within the prescribed ceiling of $19.1 billion for the US in agriculture domestic support.
In an increasingly hostile global trade environment, India and the US have been trying for a free trade agreement, for which both the countries have been working on an initial trade deal for almost two years now.
A number of issues, like medical devices, agriculture, Harley Davidson motorbikes, e-commerce, among others, had made it difficult to make any headway on the limited trade deal.
In these uncertain post-COVID-19 times, most countries are trying to dilute their dependence on China. India too has been pitching self-reliance on a policy-level. Though it doesn't imply import substitution, but it is trying to ramp up domestic production by providing support for manufacturing activities within the country, to cut down on import dependence.