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India’s MSP programme for pulses under WTO lens

Canada, US serve counter-notification to India
India’s minimum support price (MSP) programme for pulses has come under greater scrutiny at the World Trade Organization (WTO) with the US, Canada and Australia serving it a formal counter-notification, alleging that the subsidy involved was much higher than the permitted cap. The EU, New Zealand, Ukraine and Paraguay also joined the chorus against the country.
Defending itself at the agriculture committee meeting this week in Geneva, India said the calculations of MSP made by the US and Canada were incorrect and stressed that its price support programme for pulses was only to ensure nutrition supply for 195 million poor people.
The five pulses covered under MSP are chickpeas, pigeon peas, black matpe, mung beans and lentils.
“Contrary to India’s reported number of 1.5 per cent of total value of production, Canada and the US believed India’s MPS (market price support) for pulses was actually between 31-85 per cent, vastly exceeding its de minimislimits (cap) of 10 per cent of the total value of production,” a Geneva-based trade official said.
In case it is established that India’s ‘trade distorting support’ exceeds the cap, it would be forced to discontinue the support programmes, failing which it may have to pay penalties. Although India and a number of developing countries have been demanding that food procurement subsidies should not be capped, WTO members are yet to arrive at a “permanent solution” to the problem.
India has earlier been served three counter-notifications targeting wheat, rice, sugar and cotton. The US and Canada also claimed there are a set of specific methodology issues in India’s notifications that are inconsistent with WTO regulations. India reported support levels in dollars rather than rupees, included only volumes actually purchased as eligible production for the purpose of determining support levels, and failed to report total value of production, it said.
In addition, India only provided the aggregate MPS support for five pulses products without breaking down figures according to each product, it added.
Nutrition supply
In response, India said that the US and Canada’s counter-notification, co-sponsored by Australia, was based on incomplete and misleading information. “India said its minimum market price support for pulses … was merely to ensure nutrition supply for 195 million poor people and is a very small quantity. It insisted that eligible production is only the volume actually purchased by the government,” the trade official said.
With respect to the issue of currency, India repeated that there is no obligation in the WTO in terms of the currency to be used and many members chose to report in US dollars as India did. If the complaining members are not satisfied with India’s explanations, the matter could be dragged to a dispute settlement panel.