India has once again utilized the peace clause at the World Trade Organization (WTO) for the fifth consecutive time, citing rice subsidies exceeding the prescribed limit during the 2022-23 marketing year. Despite breaching the 10% domestic support ceiling, India faces no immediate repercussions due to the peace clause provision, agreed upon at the 2013 Bali ministerial.
India’s rice production in 2022-23 amounted to $52.8 billion, with subsidies totaling $6.39 billion, surpassing the 10% domestic support ceiling by 2%. This breach, though acknowledged, doesn’t trigger penalties under the peace clause agreement.
India justified its actions to the WTO, clarifying that the subsidies were essential for meeting domestic food security needs, particularly for the impoverished and vulnerable population. The government emphasized that these subsidies were not intended to distort trade or adversely impact other WTO members.
India has persistently advocated for amendments to the formula determining food subsidy caps and urged for expedited resolutions to the issue of public stockholding. The current subsidy ceiling calculation, based on the reference price of 1986-88, is deemed outdated by India, necessitating an update to reflect current economic realities.
A permanent solution is imperative as certain developed nations have raised concerns regarding India’s minimum support price program, especially for rice. India’s repeated breaches of suggested subsidy limits have drawn scrutiny under WTO trade norms, making a lasting resolution crucial for future trade negotiations and stability.
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