India’s firm stand at WTO Ministerial saved its schemes for food security and MSP

PM Narendra Modi with union minister Piyush Goyal

New Delhi: Despite pressures, particularly from developed nations to reduce domestic support on agriculture and allowing them easy market access for their farm produce, India prevailed upon the lobby at the Abu Dhabi Ministerial Conference (MC13) of WTO, which was concluded on March 2, 2024 with two days of extension from the scheduled closing date of February 29.

Credit goes to Narendra Modi government and Commerce Minister Piyush Goyal’s ability to withstand such international pressures to protect Indian agriculture and interests of Indian farmers. Global powers criticised India for a rigid position, and the same was reflected in a report by international news agency Reuters, which quoted European Commission Executive Vice President and Trade Commissioner Valdis Dombrovskis. According to the report, Dombrovskis expressed disappointment over the lack of consensus on fisheries, agriculture and broader reforms, and singled out India for blame”. His frustration is legitimate, but India could not sacrifice its national interest for building a global consensus, which would have benefitted the developed nations.

Today’s India is different — both politically and economically — than what it was about a decade ago, when it agreed to allow a ‘peace clause’ – a crucial provision for India to support its farmers through schemes like minimum support price (MSP). At the Ninth Ministerial Conference (MC9) in Bali in December 2013, members agreed that the “peace clause” is an interim solution to public stockholding (PS) for food security purposes and a permanent solution would be found by 2017 (the 11th Ministerial Conference or MC11). Members agreed that the “Peace Clause” – vital for India’s MSP programme — would remain in force until MC11 or 2017, and at that time the then commerce minister Anand Sharma was attending the conference. As all decisions of WTO are based on consensus, India at MC9 in Bali, agreed to lose the legal protection of “peace clause” available to it to run its MSP programme.

Had the Modi government not intervened immediately after assuming power in May 2014, India would find it difficult, if not impossible to run its MSP programme, something crucial for Indian farmers. HT extensively reported that during the MC13 (February 26 to March 2, 2024), agriculture was the top priority of both India as well as Europe, where farmers are up in arms over issues like subsidies and market access. The most vital part of agriculture for Indian and its partners (almost 80 countries) was negotiations related to public stockholding (PSH) for food security. PSH is of key importance for two reasons – first, it involves procurement of food grains from farmers assuring them MSP for their produce if market prices fall; and second, grains are procured to provide free dry ration to over 810 million poor under the Prime Minister Garib Kalyan Ann Yojana (PMGKAY), besides fulfilling obligation to distribute highly subsidised food items under the National Food Security Act (NFSA).

WTO rules limit the subsidy that can be provided to such farm products being procured. The G-33 — a coalition of developing countries including India and African groups, over 80 countries in total – is demanding a permanent solution to PSH for food security purpose while improving the ministerial decision adopted at the ninth ministerial conference (MC9) in Bali in December 2013, where members agreed to negotiate a permanent solution on this issue by the MC11 and in the interim, they agreed to exercise due restraint (also called the peace clause) in raising disputes in respect to PSH instituted before December 7, 2013, even if countries exceeded their permissible limits.

Unless the then commerce minister (current finance minister) Nirmala Sitharaman would have made efforts, India would have lost the shield of “peace clause” which by MC9 of Bali was to expire in 2017. On August 5, 2014, she informed the Parliament that India had decided “not to join the consensus in the WTO on the implementation of the Trade Facilitation Agreement till our concerns relating to the implementation of other Bali Ministerial Decisions, in particular, the Decision on Public Stockholding for Food Security Purposes, were addressed”. She worked hard on this crucial matter of Indian farmers and convinced the US to support India’s demand to continue this “peace clause” beyond 2017 by perpetuating it till the time a permanent solution is arrived at. After a firm stand taken by Sitharaman on this matter at the WTO, its general council (GC) in November 2014 extended the peace clause “in perpetuity” until a permanent solution is agreed and adopted. The MC10 at Nairobi endorsed the GC decision. However, no outcome was achieved on this matter in subsequent ministerial meetings (MC11 at Buenos Aires and MC12 at Geneva). Hence, Indian farmers remained protected even after MC13 at Abu Dhabi failed to resolve issues pertaining to agriculture.

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