WTO panel asks India to withdraw subsidies in sugar dispute

India, the world's biggest sugar producer after Brazil, encouraged overseas sales for three years in a row, helping New Delhi emerge as a significant, stable exporter of the commodity

A World Trade Organization panel ruled in favour of Brazil, Australia and Guatemala on Tuesday in their trade disputes with India over sugar subsidies and asked New Delhi to conform with global rules.

In the cases brought before the WTO in 2019, the rival producers alleged that India had broken WTO rules by providing excessive domestic support and export subsidies for sugar and sugarcane.

"We recommend that India bring its WTO-inconsistent measures into conformity with its obligations under the Agreement on Agriculture and the SCM (Subsidies and Countervailing Measures) Agreement," the panel said.

India, the world's top sugar producer after Brazil, may appeal the decision. Its mission to the WTO in Geneva did not immediately respond to a request for comment on the ruling in the conclusion of the panel's 115-page report.

It found that for five sugar seasons between 2014-15 and 2018-19, India provided domestic support to its sugarcane producers in excess of the maximum level of 10% permitted by a global agriculture deal.

It also said that India failed to notify a WTO committee of its sugar export subsidies, violating a separate agreement.

However, the panel did not uphold one of Australia's allegations that India had maintained buffer sugar stocks which it should have reported to the WTO in the 1990s.

India encouraged overseas sales for three years in a row, helping New Delhi emerge as a significant, stable exporter of the commodity.

After protests from Brazil, Australia, and Guatemala, the WTO in 2019 decided to set up panels to rule on complaints against India's export subsidies for sugar.

The Australian Sugar Milling Council (ASMC) said in August that there was "widespread concern amongst the world's sugar producing countries that the Indian government might be contemplating further contentious export subsidies".

ASMC had commissioned a report from Green Pool Commodity Specialists, which estimated India's sugar overproduction between 2017 and 2020 cost Australia's sugar industry A$1 billion ($724.40 million).

"Green Pool found that the subsidies and global oversupply had forced down the price of sugar on global markets by an average two cents a pound over the four years," said ASMC Director David Rynne.

For the past many years, higher sugar production has hammered local prices, hitting mills' financial health and making it hard for sugar barons to make timely payments to cane farmers.