India invokes peace clause on rice subsidies | Economic Times

India has invoked the peace clause at the World Trade Organization (WTO), for the second time, for exceeding the 10 per cent ceiling on support it offered its rice farmers. The country informed the WTO that the value of its rice production in 2019-20 was $46.07 billion while it gave subsidies worth $6.31 billion, or 13.7 per cent as against the permitted 10 per cent.The peace clause protects India’s food procurement programmes against action from WTO members in case the subsidy ceilings – 10 per cent of the value of food production in the case of India and other developing countries – are breached.India had earlier invoked the clause for 2018-19, when it became the first country to do so.82136799“India's breach of commitment for rice, a traditional staple food crop, under... the Agreement on Agriculture arises from support provided in pursuance of public stockholding programmes for food security purposes which were in existence as on the date of the Bali Ministerial Decision on Public Stockholding for Food Security Purposes,” India told the WTO.The US, EU, Canada, Brazil, Japan and Paraguay had last year questioned India for invoking the peace clause for breaching the subsidy ceilings as subsidies are seen to be distorting global trade.“Government does not undertake exports on a commercial basis from public stockholdings. Additionally, open market sales of food grains from public stockholding are made provided the buyer gives an undertaking of not exporting from such purchase,” India informed the WTO.In its notification to the organisation, India said that under its public stockholding programmes for food security purposes, rice, wheat, coarse cereals and pulses, among others, are acquired and released in order to meet the domestic food security needs of the country's poor and vulnerable population, and “not to impede commercial trade or food security of others”. “For these reasons, the breach of the de minimis limits for rice is covered by the peace clause,” it said.“The peace clause can’t be challenged and because of this flexibility, distribution of food grains to the poor can be done for free which is crucial during the pandemic,” said Biswajit Dhar, professor at JNU.The country ensures food security through the minimum support price (MSP) programme, and Public Distribution System and National Food Security Act, 2013.It told the WTO that the main objectives of the food security programmes are ensuring MSP to farmers, stability in food grain prices and their equitable distribution at affordable prices to the marginalised and vulnerable sections of society throughout the year, maintaining an adequate buffer stock of foodgrains to deal with fluctuations in production and meeting unforeseen exigencies and natural calamities.