Global Rice News

India Faces Scrutiny Over Foodgrains Scheme and Rice Export Ban

India may have to address concerns from world leaders regarding the World Trade Organization (WTO)-compatibility of the extension of the PM Garib Kalyan Ann Yojna (PMGKAY) free foodgrains scheme and the ban on non-basmati rice exports. The WTO Committee on Agriculture (CoA) meeting, which begins today, will see members like the United States, European Union, Canada, Australia, Switzerland, and New Zealand raising questions about India’s minimum support prices (MSP) commitments and export restrictions.

In July of this year, India implemented a ban on the export of non-basmati white rice in order to increase domestic supply and control retail prices in preparation for the festive season. When questioned about this ban during the WTO’s Committee on Agriculture meeting in September, Indian officials clarified that it was a method of regulation rather than a restriction. They emphasized that the ban was necessary to ensure the food security of India’s 1.4 billion people. Sonal Varma, chief economist for India and Asia ex-Japan at Nomura Holdings Inc, explained that the restrictions would likely remain in place as long as domestic rice prices continued to rise.

Canada has specifically raised the question of whether procurement under the extended PMGKAY will be done at the administered price, which could affect India’s WTO domestic support commitments. Canada suggested that procurement at current market prices would be a more effective approach to minimize trade distortions. India will need to explain their rationale for their chosen method.

India had invoked the “peace clause,” which allows developing countries to exceed the 10 percent subsidy limit of the United States and the European Union. This decision has sparked questions about India’s subsequent granting of export quotas for non-basmati rice to certain countries after the ban was implemented.

There were media reports at the time of the ban suggesting that there was enough rice supply to meet domestic demand. As a result, the United States, United Kingdom, and Switzerland have asked for clarification on the quantity of public rice stocks that India considered adequate for domestic needs when the export restriction was imposed.

Furthermore, countries are seeking clarification on the expiration dates of India’s temporary farm-related measures, including export restrictions and duties, as well as the specifics and reasons behind the ban.

India will need to provide clear and comprehensive explanations to address these concerns raised by other WTO members during the CoA meeting.

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