India will likely push for “special carve-outs” in the World Trade Organization (WTO) rules in its ministerial meeting starting June 12 to allow a country to ship out grains from its official reserves under exceptional circumstances to help address a global food shortage, sources told FE.
At present, WTO rules make it difficult for a country to export grains from official granaries if these have been procured from producers at a fixed price (minimum support price, in India’s case), instead of market rates.
India has already impressed on the WTO to permit it to ship out grains from official stocks to countries that are facing a shortage caused by the conflict between larger producers Russia and Ukraine. Even as the WTO is weighing that request, India will pitch for a rather long-term arrangement, and not a quick-fix, under the multilateral body on this matter.
Although India banned wheat exports on May 13 to curb a spurt in the grain’s prices at home, it has kept open the window for government-to-government deals to supply to the countries that are facing a shortage, including neighbors like Bangladesh and Nepal,
“A special carve-out is needed, as there should be a permanent rule under the WTO to enable a country which can supply from its official stocks to a grain-deficit country under extraordinary circumstances. It shouldn’t be a one-time relaxation for India or any other member,” said a source.
India’s wheat production is now estimated to drop from the February projection of 111.3 million tonne in the year through June to 106.4 million tonne. However, trade sources said output could crash to just 95 million tons. Still, the government will have the necessary space to cater for the requirement of the “needy nations”, an official said.
The demand for a “carve-out” will be in addition to New Delhi’s proposal for a permanent solution to the issue of public procurement for food security, which is expected to top the agenda of India and the rest of the so-called G- 33 (a coalition of developing nations) at the next WTO ministerial.
India’s key procurement programs are protected from penal provisions under a peace clause secured at the WTO’s Bali ministerial in 2013 (its permanent status was affirmed in late 2014). But some countries started making fresh demands on safeguards and transparency obligations after New Delhi invoked the peace clause for its rice procurement in 2018-19 and 2019-20.
On April 13, Prime Minister Narendra Modi said that he had offered, during his talks with US President Joe Biden, to supply India’s food stocks from official inventory to the world if the WTO rules permitted.
Subsequently, finance minister Nirmala Sitharaman said WTO director general Ngozi Okonjo-Iweala was looking “positively” at resolving the issue that is hampering the Indian government’s bid to ship out grains.
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