India’s agri subsidies must not exceed 10% of crop value under WTO, says Shivraj Singh Chouhan

As a developing country, India can provide subsidies to agricultural sector through mechanisms such as Minimum Support Price (MSP). However, these subsidies must be within 10 per cent of the production value of the crop, and WTO (World Trade Organisation) must be notified about this support annually, said a reply by the government in Parliament

Replying to a query in the Lok Sabha on Tuesday, Shivraj Singh Chouhan, Union Agriculture and Farmers’ Welfare Minister, said: “As per the WTO’s Agreement on Agriculture (AoA), all the members can provide MPS, which includes procurement of crops by the government at Applied Administered Prices, that is MSP in case of India. Such support is required to be notified to the WTO on an annual basis.

“Further, it needs to be ensured that being a developing country member, the product-specific support should be within the de-minimis limit, that is 10 per cent of the value of production of the respective crop. Similar de-minimis limit of 10 per cent also applies to the non-product specific support across the agriculture sector.”

Slew of measures

Stating that the government has taken several steps to protect the interest of the farmers, including small farmers, in the context of WTO provisions on domestic support and subsidies, he said the government fixes MSPs for 22 mandated agricultural crops and Fair and Remunerative Price (FRP) for sugarcane on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP) to ensure that farmers receive remunerative prices for their produce, thereby encouraging greater investment and production.

Since 2018-19, the government has been fixing MSP with the minimum return of 50 per cent over all-India weighted average cost of production. The MSP value paid to farmers was ₹2.48 lakh crore in 2023-24 against ₹2.37 lakh crore in 2022-23.

Financial support for farmers, including small farmers, is also provided through schemes such as the Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA) and the Pradhan Mantri Kisan Samman Nidhi (PM KISAN), ensuring continued government procurement and food distribution while adhering to WTO guidelines.

Proactive trade policies

Chouhan said India has proactively employed a combination of trade policies such as the recent increase in import duty on edible oils, removal of export duty from rice and onion, agricultural reforms such as National Agriculture Market (e-NAM), and schemes such as Pradhan Mantri Fasal Bima Yojana (PMFBY), Agriculture Infrastructure Fund (AIF), National Mission for Sustainable Agriculture (NMSA) and Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) to improve the competitiveness of its agriculture by balancing domestic needs, and international commitments.

India has aimed to protect its farmers, ensure food security, and maintain a sustainable agricultural sector in a globalised economy.

India has also been engaging in Free Trade Agreements (bilateral and regional) to promote and diversify agricultural exports while protecting its agricultural interests. These agreements often have provisions that ensure flexibility in agricultural subsidies, provide safeguards, or enable the imposition of tariffs on agricultural products, he said.

Talks on farmers’ stir

In a written reply on farmers’ agitation, Ramnath Thakur, Union Minister of State for Agriculture and Farmers’ Welfare, said the Government of India had initiated discussions with farmer groups with regard to the farmers agitation on February 8, 2024. Subsequently, discussions were held on February 12, 15, and 18 in 2024, and on January 18, 2025.

“The issues related to agitating farmers’ and their demands are also sub-judice in the Supreme Court of India and a committee has also been formed by the court.

Next round of discussion with the farmers is scheduled on February 14, 2025,” he said.

Vegetable output over 20%

To a separate question, Thakur said the Department of Agriculture and Farmers Welfare compiles estimates of area and production of horticulture crops, including vegetables, based on the assessments/ surveys conducted by the respective State Horticulture / Agriculture departments / agencies. As per these estimates, production of vegetables in the country has increased by 21.4 per cent over the last 10 years from 169.48 million tonnes (mt) in 2014-15 to 205.80 mt in 2023-24 (third advance estimates).

Drone didis

To another question on drones, Thakur said the government-approved Central sector scheme ‘Namo Drone Didi’ for providing 15,000 drones to the women self-help groups (SHGs), during the period of three years (2023-24 to 2025-26), with a view to provide sustainable business and livelihood support to them.

He said 1,094 drone have been distributed to drone didis of SHGs by Lead Fertilizer Companies (LFCs) in 2023-24 using their internal resources.

A study on economics and business viability of drone operations on the 500 drones distributed by LFCs under Namo Drone Didi scheme in 2023-24 has been entrusted to the Agricultural Development and Rural Transformation Centre (ADRTC), Bengaluru.

The preliminary findings indicates that the farmers have shown willingness to go for drone services at an average of ₹400 per acre and reported benefits in terms of saving in water, labour cost, pesticide and fertilizer consumption, contributing to increase in their productivity, he added.