The US may go to the World Trade Organization (WTO) on the issue of subsidy to wheat farmers in India. Some American lawmakers have urged the Joe Biden administration to initiate a litigation process against India on this issue at the WTO. They say that the Indian government subsidizes its farmers over half of the value of production for wheat.
In fact, US Wheat Associates, the export market development organization for the US wheat industry, has long been aggressively pushing for action against India. It has welcomed this move of the US lawmakers. There has been no response to this from the Indian side so far.
A group of 28 members of the US Congress has written a letter to the Biden administration. It says that the Indian government over-subsidizes its farmers, which is disadvantageous to the American wheat-producing farmers.
According to the US Congress members, "American commodity producers are operating at a clear disadvantage to their competitors, primarily from India, where the government is subsidizing more than half of the value of production for rice and wheat, instead of the 10 per cent allowable under World Trade Organization (WTO) rules." India is not complying with the rules, the letter says.
The US Congress members wrote the US has continually pressed India at the WTO to reform its price support programme but to no avail. "Considering India's activity, we encourage you to initiate the WTO litigation process through a request for consultations," they said.
This letter by the members of the US Congress was written on January 13. About a month ago, 18 Senators (members of the upper house of the Congress) had written a similar letter requesting the Biden administration to pursue the WTO case against India's domestic support for rice and wheat production.
National Association of Wheat Growers CEO Chandler Goule said it was important that as a WTO member, India must adhere to international commitments. It should not continue to create unfair advantages for its domestic production and distort world trade.
The United States Department of Agriculture (USDA) estimates Indian wheat exports for the marketing year ending June 30, 2022, will be 5 million metric tonnes (MMT). This will cause loss to other countries in the global market. Citing a 2020 Texas A&M University study report, it has been claimed that India’s subsidizing its farmers thus would cost the US wheat farmers more than USD 500 million per year in lost income.