India in the WTO

The Statesman carries a report that an Indian NGO has welcomed statements from EU officials about including animal welfare as a non-trade concern in WTO agreements. The report:

Animal activists in India have welcomed a move by the European Union (EU) to push for inclusion of animal welfare in the World Trade Organisation (WTO) multilateral trade negotiations. They have said that they will pursue the goal of welfare of animals including stray animals that are subjected to untold sufferings.
Hailing the EU move as the right one, Citizens for Animal Rights (CFAR), New Delhi, said that the inclusion of animal welfare standards in WTO agenda is urgently needed to effectively enforce animal standards worldwide, and to improve the appalling condition of slaughter houses in many countries, including India. India should take the lead in promoting animal welfare as the land of Ahimsa, they said.
Animal welfare concerns are being increasingly recognised in food production around the world, but they must be formalised within the WTO trade agreements, according to several senior representatives of the EU who spoke at a recent Brussels conference on "Global Trade and Farm Animal Welfare". Czech agriculture minister Mr Petr Gandalovic, the new chair of the EU Farm Council, explained that the next six months will see a strong focus on European animal welfare standards, including new slaughter rules.
EU health commissioner Miss Androulla Vassiliou also highlighted the growing importance of animal welfare issues as live animals and animal produce are traded across the world, arguing for their inclusion as a "non-trade concern" in WTO agreements. She said: “Animal welfare is gaining rapid momentum, not only in the EU but worldwide”. The importance of animal welfare in ensuring the quality and safety of meat was also highlighted, as well as the goal of minimising animal suffering.

Its interesting to see another example of an Indian NGO engaging with WTO issues.  However, I am not sure (from the above report) as to whether the Indian NGO really understands this issue. They seem to be talking about welfare of animals in all circumstances including stray animals  and their concerns are more appropriately addressed by domestic regulation on domestic treatment of animals. The EU officials on the other hand want to make this a WTO issue and bring in a WTO rule that allows countries to prevent imports on the ground of animal welfare. The issue is whether such a new emphasis on animal welfare is needed in the WTO treaties. Isn’t GATT article XX sufficient to allow for measures on the ground of animal welfare, in as much as it would be necessary to protect public morals or to protect animal life or health? The SPS agreement also allows for measures for the protection of animal life or health. Such measures can include regulation of processes and production methods. The SPS agreement would also arguably allow for otherwise trade-restrictive domestic regulation necessary for humane animal welfare standards.

And with the Doha round floundering and increasing trade protectionism all-round, measures based on animal welfare might be the subject of new battles over non-tariff barriers in the livestock farm sector. The EU’s proposed ban on seal products on animal welfare grounds is already causing friction with Norway and Canada. See a report.

See Gupta, Surupa. "The Institutional Basis of India?s Defensive Position on Agricultural Trade Policy" Paper presented at the annual meeting of the International Studies Association 48th Annual Convention, Hilton Chicago, CHICAGO, IL, USA, Feb 28, 2007 <Not Available>. 2009-02-04 http://www.allacademic.com/meta/p181265_index.html

Here is the abstract:

This paper analyzes trade policymaking in India in the context of the ongoing negotiations on trade in agriculture at the WTO. During the past decade, the overall direction of India’s trade policy has become more liberal. However, India’s position on liberalization of trade in agriculture at multilateral trade negotiations is dominated by its defensive/protectionist interests expressed in terms of a focus on livelihood security rather than its aggressive/liberal interests in gaining market access. This presents a puzzle for existing trade theory which would expect India’s farm trade policy to be more liberal, given that about 80% of India’s farm prices are globally competitive. This paper adopts an institutional perspective, and argues that the policy is ultimately a product of the existing domestic agricultural policies and the new consultative trade policy-making apparatus. Reform of existing policies has proved difficult and the Ministry of Agriculture resists liberalization because it sees itself primarily as a protector of farmers’ interests. At the same time, the government has changed the institutions for making trade policy since 1998, giving the protectionist Ministry of Agriculture greater voice in decisions at the expense of the Ministry of Commerce and Industry. The former has often vetoed more liberal positions advocated by the Commerce Ministry. The Parliament, unlike in the west, plays a minor role in setting the tone of the policy since its ratification is not required. Moreover, although in India’s federal system state governments could have used their power to shape policy, they have not organized politically to press for liberalization, instead supporting the protectionist views espoused by the agriculture ministry.This paper also shows that conventional institution-based explanations of trade policy, mainly based on the US and West European experience, need to be modified when being applied to developing countries like India. For example, institutional theories suggest an association between democracies and liberal trade policies, but this case shows that democracies can sometimes be more protectionist. Discussions of the role of bureaucracies focus on the relation between bureaucratic autonomy and trade liberalization. However, some relevant bureaucracies are not autonomous, and some autonomous bureaucracies may not support liberalization. This research suggests that bureaucracies should not be treated as unitary actors.

India’s insistence on an adequate special safeguard mechanism for agriculture is widely viewed as one of the contributing factors to the failure of the July framework talks in 2008.  Indian trade Minister Kamal Nath often describes India’s position on agriculture, including its demands for reduction in agri-subsidies by the developed world,  as a question of livelihood (and not of business) on which India cannot compromise.

What interests me is the connection between farmer suicides in India and the formulation of Indian trade policy on agriculture and the formulation of India’s Doha round negotiating position on agriculture. News reports in India about the Doha agricultural negotiations and Mr Nath’s various speeches do not directly refer to the spate of farmer suicides in India. Indeed, the political discourse in India itself (as visible in news publications) has not remained consistently engaged with this issue. Small periods of noisy outrage exist between longer periods where the issue is almost absent from the mainstream political discourse.

Though the numbers on these farmer suicides are disputed, yet even allowing for these variations, the figures are high enough to warrant a serious political impact and to expect an engaged political discussion. One would also expect that the issue would seep into agricultural trade policy issues and into Indian demands and sensitivities in the Doha round. (For example see my previous post about India wanting to be included in cotton subsidy talks – surely farmer suicides by cotton farmers in India show the serious impact of cotton subsidies for India and justify its inclusion. But I would suppose the emerging India story makes it embarrassing for the Government to flaunt this issue on the international stage).

Are farmer suicides an issue in the coming national elections? At least not in the English national press.   

So what are the facts? Where is the academic and policy research on these issues? Where are the domestic consultations with farmers groups over India’s position at Doha?

I plan to keep an eye out for what I come across on this and will post about what I find on this blog. But for the moment, the following would be of interest:

A March 2008 paper by Nagaraj of the Madras Institute of Development Studies titled ‘Farmers’ Suicides in India: Magnitudes, Trends and Spatial Patterns’, available online here  estimates that between 1997 and 2006, 166,304 farmers have killed themselves in India. For 1995-2006, the figure is close to 200,000. An average of 16,000 farmers have committed suicide in India every year for the last 12 years. The author considers even these figures an underestimation of the full extent of farmer suicides. Farmers without a property title to their farmlands are not included in the official definition of a farmer in some Indian states. The rate of suicides has shown an increase over the years. The farmers who have killed themselves are overwhelmingly male as per official figures. Female farmer suicides are most likely not counted as most female farmers would not have title to the land. Maharashtra, Karnataka, Andhra Pradesh,  Chhatisgarh and Madhya Pradesh are the top five states with the most farmer suicides. These are five contiguous states in the India heartland.

While India is now touted as a fast-growing booming economy (or at least was until the recent global recession), it is also undergoing a serious agrarian crisis. What is the link between farmer suicides and India’s agrarian crisis? The paper by Nagaraj points to a multi-causal explanation behind farmer suicides. He describes these as a social phenomenon certainly linked to India’s widespread and persistent farm crisis coupled with pre-existing conditions of vulnerability and an absence of alternative livelihood opportunities. Nagaraj dismisses sporadic, disjointed and single-point policy interventions and suggests that the crisis needs comprehensive policy intervention and a complete reorientation of agrarian policies. So where is the research on what should be India’s agricultural trade policy in the context of these suicides? 

Also see the Final Report on Causes of Farmer Suicides submitted to the Mumbai High Court from 2005 by the Tata Institute of Social Sciences.

Leaves me wondering who is accountable for these large number of deaths?

For more see this Counterpunch story, this New York Times story

Indian Commerce Secretary says India cannot be kept out of Doha talks on reducing cotton subsidies. The Economic Times reports:

India has said it should be included in the exclusive meetings which the US has been holding with West African cotton producing countries on subsidy cuts as part of the on-going Doha round of multilateral trade talks at the World Trade Organization (WTO). As India is the second largest cotton producing country in the world, it said that it should be made part of all discussions on reduction of the high US subsidies on cotton.

Addressing a seminar on threat to multilateralism in the evolving global scenario organised by Ficci on Friday, commerce additional secretary R Gopalan said that India wants to be part of the discussions taking place between the cotton four countries (which includes Benin, Chad, Burkina Faso and Mali) and the US on subsidy reductions in cotton. “We, too, want to be part of the discussions as we too are a major cotton producing country. We cannot be kept out of the talks,” he said.

Well this is interesting. India ought to worry about a special deal on subsidy cuts being offered by the United States to the Cotton four (all least developed countries) as part of WTO special or differential treatment or as what it is more fashionably called these days, –“variable geometry”.

It also shows how despite India becoming a part of the so-called “core group” in Doha round talks, it can still be excluded from talks on issues that directly affect it and where its stance is likely to be viewed as hindering a deal. Of course these are bilateral talks between the United States and the Cotton 4, yet once a deal is reached there and with Brazil the other main stakeholder in this issue, India might get sidelined and be confronted with a deal that it will find difficult to renegotiate.

Joseph Stiglitz in his film ‘The World According to Stiglitz’, draws a direct connection between such subsidies and the drop in cotton prices in India which led to thousands of poor farmers committing suicide last year. See here

Meanwhile Brazil has reportedly asked the United States for $2.5 billion in sanctions for losses caused to Brazilian cotton producers on account of illegal US cotton subsidies between 1998 and 2000. The report:

GENEVA: Brazil is asking the World Trade Organisation to approve $2.5 billion (1.97 billion euros) in sanctions against the United States in a dispute over US cotton subsidies, the Brazilian ambassador said Monday. Roberto Azevedo said the request was lodged at a meeting of the WTO’s Dispute Settlement Body in Geneva. “We have asked the WTO to ensure that Brazil is compensated $2.5 billion for the prejudice … suffered by our cotton producers between 1998 and 2000,” Azevedo, Brazil’s ambassador to the WTO, said after the meeting. “If the big countries are not sanctioned for violations of WTO rules, that would affect the credibility of the organisation,” he added. Last June, a WTO panel upheld a Brazilian complaint that the United States had breached trade rules over its subsidies for cotton farmers. Brazil first brought the case to the trade bloc in 2002. It estimates that total US cotton subsidies were worth 12 billion dollars between 1999 and 2002. Compared with the value of cotton produced, which reached $13.9 billion during the period, it means that subsidies came to about 89.5 percent. After the WTO ruled in its favour, Brazil had said it could seek more than $1 billion in retaliatory sanctions. The subsidies paid by Washington to US cotton farmers have been criticised by non-governmental groups, who say they depress world cotton prices, thereby penalizing producers from poorer countries, particularly in Africa. The C4 group of West African cotton-producers — Benin, Burkina Faso, Chad and Mali — has since 2003 been fighting for the cotton issue to be included in the Doha Round of negotiations for a global free trade pact.

So is this as compensation or retaliation? Also, if granted, will such sanctions apply on an MFN basis to benefit cotton farmers in third countries like India?

At the request of the U.S. Senate Committee on Finance, the US International Trade Commission has launched a fact-finding investigation into whether US agricultural exports to India are being impeded due to Indian tariff and non-tariff barriers. The ITC news release has more:

The investigation, India: Effects of Tariff and Nontariff Measures on U.S. Agricultural Exports, was requested by the U.S. Senate Committee on Finance.

In its letter requesting the investigation, received on January 13, 2009, the Committee stated: "U.S. agriculture depends on reliable access to global markets. Strong economic growth in developing countries like India presents opportunities for U.S. agricultural exports…. While U.S. exporters can provide individual examples of trade measures that prevent their sales to India, the extent to which trade and investment measures account for the disproportionately low U.S. share of India’s agricultural imports remains largely undocumented."

As requested, the ITC, an independent, nonpartisan, factfinding federal agency, will provide an overview of the Indian agricultural market; a description of the principal measures affecting Indian agricultural imports; information on Indian government regulations, including state regulations, covering agricultural markets and foreign direct investment affecting U.S. agricultural products in India; an evaluation of the impact of India’s food marketing and distribution system; and a quantitative analysis of the economic effects of Indian tariffs, and to the extent possible, nontariff measures on U.S. agricultural exports to India.

The ITC will submit its report to the Committee by November 12, 2009.

The ITC will hold a public hearing in connection with the investigation at 9:30 a.m. on April 21, 2009. Requests to appear at the hearing should be filed no later than 5:15 p.m. on March 24, 2009, with the Secretary, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. For further information, call 202-205-2000.

The ITC also welcomes written submissions for the record. Written submissions (one original and 14 copies) should be addressed to the Secretary of the Commission at the above address and should be submitted at the earliest practical date, but no later than 5:15 p.m. on June 26, 2009. All written submissions, except for confidential business information, will be available for public inspection.

Further information on the scope of the investigation and appropriate submissions is available in the ITC’s notice of investigation, dated February 9, 2009, which can be obtained from the ITC Internet site (www.usitc.gov) or by contacting the Office of the Secretary at 202-205-2000.

ITC general factfinding investigations, such as this one, cover matters related to tariffs or trade and are generally conducted at the request of the U.S. Trade Representative, the Senate Committee on Finance, or the House Committee on Ways and Means. The resulting reports convey the Commission’s objective findings and independent analyses on the subject investigated. The Commission makes no recommendations on policy or other matters in its general factfinding reports. Upon completion of each investigation, the ITC submits its findings and analyses to the requester. General factfinding investigations reports are subsequently released to the public, unless they are classified by the requester for national security reasons.

Business Line published an article recently that discusses ministerial turf battles in the way trade policy is made in India. Here is the article in full with items of interest highlighted for those interested in trade policy formulation issues:

Harish Damodaran

New Delhi, Jan. 15 The Centre has rejected the proposal to accord statutory status to the Commission for Agricultural Costs and Prices (CACP) while also extending its mandate to provide advice on tariff policy and other trade-related matters.

The Cabinet Committee on Economic Affairs (CCEA), which met here on Thursday, did not accept the recommendation by an Expert Committee under Prof Y.K. Alagh to confer statutory status to the CACP.

The proposal, had it gone through, would have made it mandatory for the Centre to fix the minimum support prices (MSP) for various crops at levels recommended by the CACP. The underlying idea here was to insulate fixation of MSPs from political pressures and subject these, instead, to rational economic principles.

But the Expert Committee’s suggestion was rejected by the Cabinet, ostensibly at the instance of the Union Agriculture Ministry. The latter held that the CACP recommends MSPs well before the start of the cropping season, whereas the crop gets harvested much later.

‘No flexibility’

If the Centre was bound by the MSPs recommended by the CACP, there would be no flexibility to respond to changing market conditions and fix procurement prices accordingly. In such a situation, it was felt that the CACP’s present status as a purely ‘recommendatory body’ be maintained, official sources told Business Line.

The CCEA also rejected the Expert Committee’s proposal to extend the CACP’s terms of reference so as to include, “To advice from time to time on the tariff structure and other measures relating to imports and exports of agricultural commodities and their processed products”.

This would, in effect, have made it mandatory for the Centre to consider the CACP’s views regarding increases or decreases in import tariffs for any agri-commodity and measures to restrict or ban export/import of particular products.

“The opposition in this case came mainly from the Commerce Ministry, which expressed reservations on any role for the CACP to advice on trade and tariff matters, so as to integrate these with MSP policy,” the sources said.

“The Commerce people felt the CACP cannot be authorised to advice on what the tariff levels for individual commodities should be, so as to maintain the MSPs recommended by it. This may result in trade distortions which go against the basic economic principles of free trade,” they pointed out.

The Commerce Ministry, on the contrary, held that the CACP incorporate a member representing the Ministry. This would, in turn, ensure that the CACP would recommend MSPs and related actions that “do not come in conflict with broad trade objectives” and “are compatible with the World Trade Organisation and other bilateral and multilateral arrangements,” the sources added.

The CCEA also rejected the Expert Committee’s suggestion to expand the coverage of MSP and the official cost of Cultivation Scheme to horticulture crops, i.e. fruits and vegetables.

Methodological issues

The Prof Alagh-headed Committee was constituted by the Agriculture Ministry on May 7, 2003 to study various methodological issues in fixing MSPs of crops. Its terms of reference also included examining the existing mandate of the CACP and whether or not to reposition its role so as to provide greater teeth to its recommendations.

The Committee submitted its report on May 31, 2005, which was then forwarded to other Ministries (Finance, Commerce, Food, Planning Commission) for seeking their views before being placed for the Union Cabinet’s consideration.

The author of the report in question, Prof Alagh discusses ministerial turf battles and the difficulties of policy coordination because of bureaucrats unwilling to give up power. See his comment in the Financial Express here. An excerpt:

Finally the real differences. Apparently the government, or parts of it, does not want tariffs to be integrated with price policy in agriculture. It therefore does not agree with the Alagh Committee’s real concern that integrated policy should be followed to give incentives for a competitive agriculture. The report takes crops, works out the efficient farmer set and shows how within tariff bounds, with some monetary policy built in (the Venugopal Reddy simulation), it is possible to hold the farmer’s hand for the transitional period in which he moves over to a lower cost per unit of output, not land, or in which global trade is modernised following Kamal Nath. The report describes this in terms of ‘efficiency pricing’ or other variants of long-range marginal cost pricing, fully aware that it is not talking of industry. Anybody who reasons against this needs to do serious home work.

There seem to be sections of government that don’t want this. We don’t know why. Turf battles could be one reason. Policy coordination is always easy in a textbook and a report but normal persons don’t like to give up power. Only the exceptional become more powerful by shedding power and coordinating for the larger good. Another reason could be the fear of rule based systems for these can dilute the power play in weak coalition regimes. There is a trend in not having a chapter on perspectives in the Eleventh Plan and not accepting the challenge of creating a medium term environment for competitive agriculture. But then you are in real trouble, for to have MSPs and separately free imports is like pouring water in a leaking bucket. You did this at great cost a few years ago in the grain crisis period. Finally there could be the fear of the unknown.

But we are traveling in uncharted territory. After the dithering of the nineties, we are doing a superb job in the WTO. I am sure whatever the first reaction, having accepted a trade dominated regime, we will finally accept the challenge of the rational transition to it. The friendly ghost of the Alagh Committee will keep on coming back and will be exorcised only when we are fully competitive in our agriculture.

Those interested in going deeper, can find out more about the Commission on Agricultural Costs and Prices (the CACP) here.

The Business Standard carries an article today which suggests (and it seems based upon access to information from people who were in the negotiating room) that the issue that sunk the mini-ministerial wasn’t special safeguards for agriculture but cotton subsidies.

According to Bhaskar Goswami, the author of this article:

On the 8th day of negotiations the talks were deadlocked and Pascal Lamy, Director General of the World Trade Organisation (WTO), circulated a revised draft on Special Safeguards Mechanism as a compromise move (trade circles in Geneva suggest that the proposal was drafted by European Union). As is widely known, all drafts of developed countries are circulated at the WTO with US approval and this draft was no exception. Besides, Lamy is not exactly known for producing surprises for the US.

The revised text, although undermining the rationale of safeguarding before harm could occur, was acceptable to India on the 9th day. This was admitted by Kamal Nath. However, midway during the discussion Susan Schwab, the US Trade Representative, hardened her stand. Not only did she turn adamant against accepting a reduced import trigger, she suggested that it be revised upwards by 10 percent! Somebody sure was desperate to ensure that the negotiations fail while the discussion was on Special Safeguards Mechanisms, and India and China take the blame for it.

At the WTO, the US either negotiates from a position of strength or, if its defensive issues are raised, scuttles the negotiations. This is exactly what it did in Geneva this July. What activated this sudden hostile line of argument by the US is not very difficult to gauge. Since Special Safeguards Mechanisms were the second-last topic under discussion, an agreement on this would have brought the discussion to the last issue — cotton subsidies.

Mr. P. Chidambaram, Indian Finance Minister in a long interview to Tehelka has commented on the Indian growth story and on what’s going well, what’s going badly and his vision on how the Country can develop. Here are a few extracts on trade and investment related issues:

On diversion of food crops to biofuels –

“We grow food to consume it as food. We don’t grow food to be converted into fuel. Twenty percent of US corn is being diverted to fuel. Sugarcane is being diverted to fuel. Palm oil is being diverted to fuel and because of the high prices of fuel linked to the crude oil crisis, people are diverting land which is meant to grow food grain to grow crops for bio-fuels. How is this justified in a world where millions of people are still going without food? We are serious about making poverty history. We are serious about eliminating hunger and malnutrition. I think the first point everybody should agree on is that food should not be converted to fuel. If you want to produce bio-fuels using non-food, do so. Find other land to grow crops for producing bio-fuels.”

On urbanization as India’s future:

“Urbanisation cannot be stopped. It is an inexorable process. All you can do is mitigate the harmful effects of mindless urbanisation by building new cities, by limiting the size of cities, by creating more green and open spaces in cities. I don’t think it’s within the power of any country or people to stop this natural progression. We must try to manage it rather than interfere with it. My vision of a poverty-free India will be an India where a vast majority, something like 85 percent, will eventually live in cities. Not megalopolises but cities. In an urban environment it is easier and more efficient to provide water, electricity, education, roads, entertainment and security rather than in 6,00,000 villages. I also believe a significant number of Indians would want to live in the countryside and continue farming. That should be welcome and we should encourage it, but it would be a much smaller number than people who have moved to cities. My vision again is that we must continue to emphasise the imperative need of growth over a long period of time. We get weary easily. We have three to four years of high growth and we sit back as though it is a given. Growth is not a given. You have to work hard for it. We have to ensure that the growth process continues for the next 20-30 years. When we have eliminated poverty, illiteracy, some of the most debilitating diseases, when we have immunised every child, when we have eliminated very basic deficiencies like lack of drinking water, electricity, rural road connectivity — at that point of time, the process will become automatic and people will themselves ensure that growth continues at a fairly sustained pace. But for that that moment to arrive, to get rid of poverty in our lifetime, we need to work very hard to sustain a growth rate of nine percent moving up to 10 percent. If you want to get rid of poverty over the next hundred years, you can have a different model or system. But if you want to get rid of it in the next 20 years, we have to work very hard for it.”

On fixing the agricultural sector in India:

“This year, the latest assessment of 2008 by ICRA will show a growth rate of 4.5 to 4.7 percent in agriculture. We are going to end up with 227 to 230 million tonnes of food grains. So agriculture in itself is doing well. Yet farmers are poor because of the vast numbers dependent on agriculture. If the numbers were much smaller, let’s say half, you would say agriculture is doing very well in India. So I don’t think we should confuse the issue between agriculture doing well and farmers doing poorly. The way to fix agriculture is to address the five key inputs required for agriculture:water, power, seeds, fertiliser and credit.

I think we have done well on credits. We are beginning to do well on water, thanks to the massive outlays and irrigation projects. It will take some time, but when these projects are completed, we will do well on water. We have neglected seeds, we have got a completely distorted fertiliser subsidy regime, and we have failed miserably on the power front. But Gujarat has shown us the way on how to fix power for agriculture. With seeds, we made a beginning last year. We are trying to increase the replacement rate of seeds and, with fertilisers, there is a clear way out provided we are willing to bite the bullet. If all these five things come together, agriculture will grow at a very rapid rate of more than four percent a year. But even if it grows at four percent, farmers will continue to remain poor because of the large numbers dependent on agriculture. So the answer is to wean farmers away from agriculture into industrial services — not urban slums, just non-farm related activity. Do away with the romantic idea that we can continue to sustain 60 percent of our population on agriculture.”

On opening up retail to FDI:

“This is a genuine fear. There is no empirical evidence to show that mom and pop stores will be wiped out if retail chains come. For example, Walmart. I met its chairman the other day and he said their 47th store has opened in China and there’s no evidence that mom and pop stores in China are being wiped out. But still, the fear is genuine, and it is the duty of the government to allay that fear. And until it is completely removed, we are moving slowly and cautiously. We are not saying the fear is unjustified. That is why we have opened only wholesale, cash-and-carry and single brand retail to foreign investments. We have not yet opened multi-brand retail.”

As mentioned on this blog (see here), Thailand, Australia and Brazil had complained last year that freight subsidies available for Indian sugar exports might violate WTO subsidies disciplines.  The Indian Central Government has responded by declaring that these subsidies will end in October this year. See the Economic Times report, which also speculates on whether the sugar trade will be liberalised in the forthcoming budget.

The sugar trade in India is controlled by the government, which sets a monthly limit on the quantity that millers can sell freely in the market to ensure stable supplies and prices in the nation of more than a billion people.
Every year before the Budget there is talk the government, which has liberalised most parts of the economy, will open up the sugar sector but this has not happened so for.

Update (29 Feb) – Bloomberg reports on how the Indian sugar industry will react to the cutting-short of freight subsidies and on the background to the issue.

India, the world’s second-biggest sugar producer, may export more of the sweetener this year than previously forecast as mills boost sales before the government scraps a subsidy in October, seven months sooner than planned.

Overseas sales may total as much as 5 million metric tons in the year ending Sept. 30, compared with 3.5 million tons forecast previously, said Prakash Naiknavare, managing director of the Maharashtra State Co-operative Sugar Factories Federation Ltd.

A surge in exports from the South Asian nation may slow this year’s 35 percent gain in global sugar prices. Raw sugar, traded in New York, is the sixth-best performer this year among 26 futures in the UBS Bloomberg Constant Maturity Commodity Index.

“I think it’s a golden opportunity to lower supply in India and companies will respond anyway,” Narendra Murkumbi, managing director of Shree Renuka Sugars Ltd., India’s biggest refiner of the commodity, said in a phone interview. “Uncertainty about the subsidy had caused a lull in exports. That’s ended.”

…

India shipped only 1.7 million tons last year because of a ban on exports that was lifted in January 2007.

Mills have shipped 2.5 million tons since Oct. 1, with raw sugar accounting for 60 percent of sales, and can export as much through September, Naiknavare said.

The government will help:

Farm minister Pawar said Feb. 26 he’d be “happy” if the industry sells 5 million tons overseas and promised to ease delay in shipments because of congestion at ports and non-availability of wagons.

…

“The government has promised to help with more railway rakes and priority loading at ports to ensure we ship as much sugar as possible,” he said. “Selling another 2.5 million tons isn’t a tall order.”

Gruère and Rao, Review of International Labeling Policies of Genetically Modified Food to Evaluate India’s Proposed Rule, in AgBioForum, The Journal of Agrobiotechnology Management & Economics, Volume 10 // Number 1 // Article 6 available here

Abstract

This paper provides a comprehensive review of existing international labeling policies of genetically modified (GM) food and associated relevant international agreements in order to evaluate India’s proposed mandatory labeling rule. Existing evidence from developed countries shows that mandatory labeling regulations have resulted in no additional consumer choice or information. Among the few developing countries with labeling policies, most have not effectively implemented their regulations. We show that India’s proposed labeling rules for GM food would be among the most stringent globally and could potentially result in low consumer benefits at a high cost both domestically and internationally. India’s proposed regulation also lacks a number of elements to be implemented. However, these conclusions are based on experiences from other countries and limited available information from India. More studies are needed to evaluate the potential economic effects of GM food labeling in India.

Also see:

Ramaswami, Biofortified Crops and Biotechnology: A Political Economy Landscape for India, in in AgBioForum, The Journal of Agrobiotechnology Management & Economics, Volume 10 // Number 3 // Article 6 available here

Abstract

Micronutrient deficiencies are responsible for major health problems among the poor in India. Biofortification promises to be a cost-effective approach in enhancing the intake of micronutrients. However, it requires government support in terms of resources and regulatory climate. This paper assesses the political receptivity to biofortification especially when it may involve genetic engineering. The paper draws on an understanding of political economy of pro-poor policies as well as the political responses to Bt cotton—the only GM crop that has received regulatory approval. The paper argues that mainstream political parties are unlikely to take strong positions on biofortified crops�whether in favor or in opposition—unless it affords an opportunity to politically mobilize farmers. If it involves genetic modification, biofortified crops will certainly be opposed by NGOs opposed to biotechnology. The extent of support from the scientific community will depend on whether the health and nutrition community is involved.