NEW DELHI: Australia has dragged India to the World Trade Organisation (WTO) challenging its sugar subsidies, with the Australian media reporting on Friday that the country was initiating legal action against the world’s second largest sugar producer. Alleging that the subsidies have seen Indian sugar production leap from an “average 20 million tonnes to 35 million tonnes this year”, Australia says these subsidies exceed the level of farmer assistance permitted under WTO rules. The issue is set to be discussed at the WTO’s Committee on Agriculture meeting later this month.
India has so far announced several relief packages for its debt-ridden sugar sector this year, with mills saddled with several thousand crores of arrears due to farmers. With a record 32 million tonnes of production reaped during the 2017-18 marketing year (October-September), the government’s relief packages have tried to manage excess supply.
The first of India’s sugar sector relief packages came in June this year, with nearly Rs 4,500 crore allocated for soft loans to build ethanol capacity. In two separate actions in September, it increased prices for ethanol derived from 100 per cent sugarcane juice and B-heavy molasses, while offering more production aid to farmers and transport subsidies to mills for sugar exports.
India’s sugarcane farmers were expected to produce as much as 35 million tonnes of sugar during the current marketing year (October 2018-September 2019). However, this number is likely to be lower than initially expected at around 32 million tonnes, ISMA said in a revised projection recently, due to untimely or erratic rainfall. Meanwhile, diversion of cane into ethanol production through tenders floated by oil marketing companies is expected to reduce sugar production by another 5,00,000 tonnes.
(With inputs from agencies)