Brazil unhappy with India’s sugar export subsidy

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To reduce the sugar surplus, the Indian government on August 28 announced sugar export subsidy. The Indian sugar industry has welcomed this move, but other countries seem to be unsatisfied. Brazilian sugar industry group Unica alleges that this announcement will hamper the global sugar prices.

Unica said, “New sugar export subsidies announced by the Indian government are unsustainable and will only prolong the current cycle of low global sugar prices. It is not in accordance with the rules set by the World Trade Organization (WTO).”

The Indian government says the subsidy shall be in conformity with the provisions of Article 9.1(d) & (e) of Agreement of Agriculture and thus WTO compatible.

Not just Brazil, even Australia and Guatemala are against India’s sugar subsidies. The rival countries allege India’s subsidies are inconsistent with the WTO obligations and distorting the sugar market. Also, they claim it aids in building a global sugar surplus, which is ultimately affecting the farmers and millers of their respective countries.

Brazil, Australia and Guatemala had knocked the door of World Trade Organization against India’s sugar subsidies, following which on August 15, WTO sets up adjudicatory panel over the issue.

Cabinet approved export subsidy for exporting 60 lakh metric tonne of sugar. The policy for the 2019-20 sugar season involves an export subsidy of Rs 10,448 per metric tonne (mt) to sugar mills. The total estimated expenditure government will bear Rs 6268 crore.

The Indian sugar industry is suffering from various hurdles from last two to three years, and to bring the sector out of the crisis, the government had introduced various measures like soft loan scheme, hike in minimum selling price, scrapping of export duty, 100 per cent rise in import duty, and others. Sugar surplus in the country causing harm to the sector, so this move by the government will be helpful in reducing the sugar glut in India.

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