Several commodity exporting countries that are either suppliers to, or competitors, to India in the international market have made the World Trade Organisation (WTO) an arena to spar with India. The idea seemingly is to pressure India into continuing to be a major destination market for their supplies or to blunt India’s competitive edge in export.
Agricultural commodities in question include pulses and vegetable oils that India imports in sizeable quantities and sugar that India has been exporting in recent years In January, during India’s Trade Policy Review meeting, the US and the EU flagged certain trade-related issues including increase in import duties. They also raised certain questions about India’s agricultural support programmes such as the minimum support price for various crops.
At the last WTO Committee on Agriculture meeting on March 29-30, member-countries questioned India on various issues including continued restrictions on pulses import, wheat stockpiling, short-term crop loans, export subsidies for skimmed milk powder and export ban on onions.
The latest attack is on India’s ambitious plan to step up domestic oilseeds output so as to reduce dependence on vegetable oil imports which cost roughly $10 billion (about ₹75,000 crore) in foreign exchange annually for bringing in 13-14 million tonnes of palm, soybean and sunflower oils.
WTO member-countries are questioning India mainly regarding incentives to oilseed growers to boost output. Two points are worth considering. One, they have no business to question, so long as the incentives are well within the permissible limits. Second, there indeed are ways India can boost domestic oilseeds output even without direct financial incentives or monetary support to growers.
Instead of the tariff route, India should look at the trade policy. It is well known that more often than not, vegetable oil imports are excessive and speculatively driven. Building large inventory of low-priced imported oils within the country depresses domestic oilseeds prices and discourages oilseed growers. This has been going on for two decades and must be stopped.