Australia flags India's sugarcane support as above WTO limit

Australia has sought clarifications from India on its domestic sugarcane and sugar policies, contending that New Delhi appears to have provided support to sugarcane farmers well above the limit permitted under World Trade Organisation (WTO) rules during seven years between 2018-19 and 2024-25.

Under the WTO's Agreement on Agriculture (AoA), domestic support for sugarcane is capped at 10 per cent of the total value of production.

In a paper submitted to the WTO, Australia said it was seeking further clarification from India on its domestic sugarcane and sugar policies, given the country's position as the world's second-largest sugar producer and third-largest exporter.

“Historically, as the world's second-largest sugar producer and third-largest exporter, dynamics in India's sugar market have significant implications for both prices and trade in the global market,” Australia said.

It added that it was prepared to engage with India and other WTO members on the significance of India's market price support and the resulting aggregate measurement of support (AMS) for sugarcane.

According to the Australian submission, India appears to have provided sugarcane AMS “vastly in excess” of the limits prescribed under Article 6, paragraph 4 of the AoA, which permits support of up to 10 per cent of the total value of sugarcane production.

The Australian paper noted that the Indian government fixes the fair and remunerative price (FRP) of sugarcane for each sugar season.

The FRP is an administered price that effectively serves as a floor price for sugar mills when purchasing sugarcane from farmers.

Besides the FRP, farmers are paid premiums linked to higher production efficiency. In some states, they are also eligible for additional payments from sugar mills under state-level support mechanisms known as State-Advised Prices (SAPs), Australia said.

The paper cited data showing that India's market price support for sugarcane rose from Rs 1.125 lakh crore (USD 15.9 billion) in 2018-19 to Rs 1.52 lakh crore (USD 17.7 billion) in 2024-25.

The support peaked at Rs 1.55 lakh crore (USD 18.9 billion) in 2022-23, according to the Australian calculations.

Australia is relying on these calculations to contend that India's sugarcane support has substantially exceeded the ceiling prescribed under WTO rules.