NEWS – India has invoked the peace clause at the World Trade Organization (WTO) for the fifth consecutive time due to breaching the prescribed subsidy limit for rice offered to its farmers

HIGHLIGHTS

• The value of India’s production of rice in 2022-23 was $52.8 billion, with a subsidy of $6.39 billion given to farmers, breaching the 10 per cent domestic support ceiling.

The Peace Clause and Immunity:

• The peace clause, agreed upon at the Bali ministerial of WTO in 2013, provides immunity to developing countries from challenges for breaching the ceiling for wheat and rice until a permanent solution is found.
• There are no immediate repercussions for India due to this breach.

India’s Defense at WTO:

• India defended itself at the WTO by stating that the stocks under the programme were acquired to meet domestic food security needs, not to distort trade or affect the food security of other members.

Expert Opinions and Flawed Formula:

• Experts like Sachin Kumar Sharma note that India has repeatedly breached the domestic support ceiling due to an outdated and flawed formula at the WTO.
• The formula, based on the reference price of 1986-88, does not accurately reflect the level of domestic support being provided.

India’s Demands and Public Stockholding:

• India has been seeking amendments to the formula for calculating the food subsidy cap and pushing for a permanent solution to the issue of public stockholding.
• Through its public stockholding program, India procures foodgrains at a predetermined price and provides them free of cost to around 80 million people through the public distribution system.

Importance of a Permanent Solution:

• A permanent solution is crucial as some developed countries have raised questions over India’s minimum support price program, particularly for rice, due to breaching the suggested subsidy limit under WTO trade norms in recent years.