Impact of WTO on Indian Agriculture

The first step in understanding the impact of the World Trade Organisation (WTO) on Indian agriculture is knowing the importance of agriculture in India. In India, agriculture is the prime and largest source of livelihood, especially in rural areas. About 70% of the Indian population is dependent on agriculture. Also, India has a significant share in world agriculture exports which increased to 2.1% in 2019 from 1.71% in 2010. Agriculture also contributes a recognisable figure to the Gross Domestic Product (GDP). The agriculture sector in India has witnessed many revolutions in the past, such as the green revolution, white revolution, yellow revolution and blue revolution.

At present, agriculture is also facing problems due to the World Trade Organisation. To get a better picture, we need to know WTO’s work, importance, role, and impact.

World Trade Organisation (WTO)

The World Trade Organisation (WTO) is the only body that works globally on trade between nations. It regulates and facilitates trade between countries. The core purpose of WTO is to make things easy for the producer of goods and services and importers and exporters carrying their business.

India and World Trade Organisation

WTO agreement on agriculture

The WTO agreement on agriculture is called the ”International treaty of the World trade organisation”. It was one of the most important agreements negotiated during the Uruguay Round. It included participation from 123 countries. It took over seven years of negotiation and concluded on 15 December 15, 1993. However, it was approved only in April 1994 in Marrakesh, Morocco.

The agreement on agriculture mainly says that the reduction commitment of six years will wind up 20% of base period support in developed countries. In the case of developing countries, it will complete the reduction commitment in 10 years, which is 13%. And least developed countries were not provided with any cuts. However, the members of WTO had available choices on implementing their commitments and modifications on the ground basis of crop, calendar, etc. In the initial years, there was a lot of unfairness and inequality. In western countries, the subsidies (part of the amber box) were very high; in contrast, India had limited subsidies.; in contrast, India had limited subsidies. The amber box is a subcategory of domestic support, including trade-distorting, subsides. Later these subsidies were increased due to inflation in the price of agricultural products. This agreement only includes agricultural products, and forestry and fishery products are kept out of it. 

Reduction commitment can be defined as ”Total Aggregate Measurement of Support” (Total AMS). All non-product-specific and product-specific support are considered in one single frame or figure. 

The three main areas of agriculture and trade policies included in the WTO agreement on agriculture are:

1. Market access
2. Domestic support
3. Export subsidies 

Market access

Market access includes access opportunities, reduction in tariff and tariffication. Tariffication means removing and converting all non-tariff barriers such as minimum import price, state trading measures, quotas, etc., into an equivalent tariff. 

The benefit of this conversion was that all the non-converted barriers were included in ordinary tariffs and reduced by 36% on average, including a minimum reduction rate of 15% over six years on every tariff. Also, in 10 years, developing countries will reduce tariffs by 24%.

Domestic support

Domestic support mainly relates to and aims at reducing commitment. Reduction commitment can be explained as involvement and acknowledgement of the total level of support rather than individual communities. The domestic support policy agreed on a 20% reduction of reductions commitment for developed countries and 13.3% for developing countries.

Reduction commitment excluded policies that had no or minimal trade-distorting effect on the production of the goods.

Also, the domestic subsidies are categorised into three boxes.

1. Green box – it includes subsidies that are no or least market-distorting.
2. Blue box – It only includes ”production limiting subsidies”.
3. Amber box – It includes trade-distorting subsided.

Export subsidies

Export subsidies policies in the agreement of agriculture commit the reduction of export subsidies to developing countries or are required to reduce the expenditure on other sports subsidies by 24% and volume by 14% in equal annual instalments over ten years. For developed countries, the percentage cuts are 36% and 14% respectively in six years. This agreement has clarified that no such subsidies can be granted for the products which are not subjected to export subsidy reduction commitment.

The impact of the WTO agreement on Indian agriculture

Agricultural total prices raised at the international level due to the reduction of trade barriers and domestic substitution of agriculture resulted in benefits for India in the form of high export earnings.

The negative impact of the WTO agreement on TRIPs includes patenting of plant varieties. Due to this, Indian agriculture might face serious implications as patents in plant varieties transfer all grains into the hands of MNCs, which will explore and develop new varieties.

Also, the main concept of the agreement to promote free and liberal trade was misused. Due to this, the exporting countries started discarding their products to importing countries which caused serious issues for the economies of developing countries in which Indian agriculture was most recognisable. The Indian market witnessed many shock waves in the case of agriculture products, as cheap and low-quality products were repeatedly supplied to the Indian market.

Conclusion

India is a land of agriculture, and more than half of its population depends on it. The WTO agreement on agriculture has benefited and brought significant changes like reducing trade barriers and domestic subsidies. However, some issues still affect Indian agriculture and are yet to be sorted out, such as patenting plant varieties. WTO is helping protect biodiversity and aiding the Indian economy in getting in shape.