Context

A group of WTO members, including Brazil, Canada, and the EU, have urged India to submit timely notifications on sugar subsidies in the World Trade Organisation.

• They allege these subsidies distort global sugar trade as India is a major sugar exporter.

Reasons for Urging India to Submit Timely Notifications on Sugar Subsidies at WTO

• Lack of Transparency: A key concern is India’s failure to submit timely reports on its sugar subsidies. 
  • This lack of transparency makes it difficult for other WTO members to assess the true impact of India’s policies on the global sugar market.
• Alleged Market Distortion: Brazil, Canada, and the EU suspect India’s unreported subsidies are artificially lowering production costs, giving them an unfair advantage in the international sugar export market. 
  • This could potentially distort global sugar prices and harm other sugar-producing countries.
• Export subsidy reduction requirementsPotential Violation of WTO Rules: The WTO sets limits on the amount of domestic support a country can provide to its agricultural sector. 
  • By not reporting its sugar subsidies, India raises concerns that it might be exceeding these limits and violating WTO trade agreements. 
    • This could lead to further disputes and potential trade sanctions.
• Unresolved Dispute: The issue is further complicated by India’s ongoing appeal against a 2022 WTO ruling that declared its sugar support measures inconsistent with global trade norms.
• India’s stand: Adding to the friction, India objects to the methodology used by the US and Australia to calculate its sugar subsidies. 
  • This disagreement highlights the need for a clear and agreed-upon method for assessing compliance with WTO subsidy limits.

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Sugar Sector of India 

• Industry Ranking: Second largest agro-based industry in India, after cotton.
• Global Production Leader: India was the world’s #1 producer of sugar, with 37 million metric tons produced in 2022.
• Economic Impact:
• • Generates livelihood for millions: Supports sugarcane farmers and employs 500,000 sugar mill workers.
• Export Leader: India was the 3rd largest sugar exporter globally in 2022.
• Sugar Production in India:
  • Projected Production: 36 million metric tons in market year 2022/2023.
  • Leading Producers: Uttar Pradesh, Maharashtra, and Karnataka.
• Sugar Varieties in India and across the world:
  • Products from Sugarcane: Sugar, gur (jaggery), and khandsari.
  • Global Sugar Categories: Brown sugar, granulated sugar, liquid sugar, and invert sugar.