The Indian government finds itself in a tight spot as it navigates between the demands of protesting farmers for a legal guarantee of minimum support prices (MSP) and the mounting pressure on its farm subsidies at the World Trade Organization (WTO).
With an influential group of 19 agro-exporting countries, including members of the Cairns Group like Australia, Brazil, and Canada, criticizing India's farm support policies, tensions have escalated on the global stage.
India's attempt to secure greater flexibility to offer farm support revolves around pushing for a permanent solution at the upcoming inter-ministerial summit in Abu Dhabi from February 26 to 29.
A deadlock looms large over politically charged issues between developed and developing countries, making a resolution unlikely.
The Cairns Group has been vocal in its criticism, branding India's public stock holding (PSH) program as highly subsidized and accusing it of distorting global food prices while adversely affecting the food security of other nations.
Last year, the group proposed slashing trade-distorting farm support among WTO members, which triggered tensions, particularly among developing nations like India.
"India cannot be dragged into a dispute over its subsidies as it is protected by the 'Peace Clause' agreed upon during the Bali ministerial in 2013" explained Abhijit Das, an expert on international trade and former head of the Centre for WTO Studies. However, ambiguities in the clause leave India vulnerable to disputes.
Das highlighted the disparity in how subsidies are assessed, noting that while India's per-farmer subsidy remains low compared to countries like the US, WTO rules do not consider subsidies on a per-farmer basis, putting developing countries at a disadvantage.
"The Cairns Group is pushing for India to dismantle or reduce the scope of the MSP scheme, which is why India is fighting for better legal protection for its MSP program," Das elaborated.
He emphasized that any new schemes implemented would need to comply with the 10% subsidy ceiling, leaving them unprotected under the 'Peace Clause'.
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