Subject: Economy/Agriculture

India's agricultural sector receives substantial government support through various direct and indirect subsidies, which has led to concerns from the World Trade Organization (WTO) regarding trade distortions and compliance with international agreements.

Direct Subsidies to Farm Sector

• Income Support Programs: The PM-KISAN scheme provides direct income support of ₹6,000 annually to eligible small and marginal farmers in three installments.

• Price Support Mechanisms:

  • Implementation of Minimum Support Price (MSP) for 23 crops.
  • Market Intervention Scheme (MIS) for procurement of agricultural commodities.
  • Price Stabilization Fund (PSF) to protect against price volatility.

• Input Subsidies:

  • Fertilizer Subsidy: Government allocated ₹1.67 lakh crore for FY 2025-26.
  • Seed Subsidy through National Food Security Mission.
  • Interest Subvention on agricultural loans.

Indirect Subsidies

• Infrastructure Support:

  • Irrigation infrastructure development and maintenance.
  • Rural electrification schemes for agricultural operations.
  • Storage facilities and warehousing support.

• Marketing Support:

  • e-NAM (Electronic National Agriculture Market) platform.
  • Transportation and logistics subsidies.
  • Agricultural research and extension services.

WTO Issues and Concerns

• Agreement on Agriculture (AoA) Compliance:

  • Concerns over India's price support policies exceeding the de minimis limit for trade-distorting subsidies.
  • Debate over calculation methods based on outdated 1986-88 reference prices.

• Food Security Concerns:

  • WTO members questioning India's public stockholding programs.
  • Challenges in balancing domestic food security with international trade obligations.

• Market Access Issues:

  • Developed countries arguing against India's input subsidy mechanisms.
  • Concerns about impact on global agricultural trade.

India's agricultural subsidies, while essential for food security and farmer welfare, continue to face scrutiny under WTO frameworks. The challenge lies in balancing domestic agricultural priorities with international trade commitments through mechanisms like the Peace Clause and ongoing negotiations at the WTO's Committee on Agriculture.