Australia is reportedly considering joint action with Brazil to look into the feasibility of a formal complaint over possible sugar export subsidies by India.
Australia’s Minister for Trade, Tourism, and Investment, Simon Birmingham, has also expressed concerns over the matter.
In a statement to SBS Hindi, Mr Birmingham said, “I am deeply concerned about the state of the global sugar market with prices hovering at near decade lows. It is clear that export subsidies introduced recently by the Indian and Pakistan governments have contributed to a growing glut on global markets.”
Eduardo Leao, executive director at Brazil's cane industry group Unica, told news agency Reuters that Australian and Brazilian sugar industry groups are working together with their respective governments to prepare a formal complaint to the WTO over any possible sugar export subsidy by India.
Sugarcane mulching at a sugar mill between the Gold Coast and Brisbane. Source: AAP
India is currently the world's second largest producer of sugar after Brazil, but according to Reuters, it is set to become the world's largest sugar producer, which Mr Leao is quoted as saying would be a grave threat to a recent price recovery.
The Australian sugar industry is concerned about the large sugarcane production in India.
Australian Sugar Milling Council Director (Trade Policy), David Rynne says India has gone from around 20.3 million tons of sugar to 32.2 million tons over the last two years, which he says is a concern.
Global prices
“That momentum is continuing." he said."They are about to harvest 2018-19 sugarcane crop, and the production of sugar from that crop looks to be even higher. They are anticipating somewhere between 35 and 36 million tons of sugar. That is well in access of their domestic requirements. So there is a concern that India that India will export a lot of their surplus sugar and obviously pull the global prices down of which Australia is very much dependent upon.”
The Australian sugar industry feels the playing field with India is not level.
“The Indian sugar Industry is heavily subsidised. The Indian cane growers receive very high non-market aligned prices for their cane. There are subsidies paid to the millers as well as export subsidies,” said Mr Rynne.
The Australian government has expressed its concern to the Indian government.
“The Coalition Government has expressed its concerns to the Indian and Pakistani governments at the highest levels in the clearest possible terms. We will continue to defend the interests of our producers and are currently examining the WTO-consistency of a number of recent measures,” said Mr Birmingham.
An Indian woman sells sugarcane at a market near the river Brahmaputra in Gauhati, India. Source: AAP
The next step from Australia could be a formal complaint against India to the WTO. According to Mr Rynne, the industry has been monitoring developments.
“We have done a lot of work with the Department of Foreign Affairs and Trade to asses the legality and consistency of India’s subsidy with the World Trade Organisation entitlements and obligations and we can say that there is at a prima facie level there appears to be an inconsistency between subsidies that Indian government can provide to the growers and what they are actually providing at the moment.”
The Indian government has not made any comment over the development.
India maintains the country’s sugar exports do not violate WTO rules, saying the country gives a production subsidy and not the subsidy for overseas sales.
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