Business & Tech

Australia takes India to WTO over sugar subsidies

Australia announced on Friday it was taking legal action against India at the WTO over sugar subsidies it said caused a "significant downturn" in world prices and hurt domestic producers.

India has been blamed by Australia and other producers of driving down the price of sugar cane
India has been blamed by Australia and other producers of driving down the price of sugar cane (AFP)

Australia announced on Friday it was taking legal action against India at the WTO over sugar subsidies it said caused a "significant downturn" in world prices and hurt domestic producers.

India, the world's second-largest sugar producer, has been giving help to its cane growers, who reported record production last season.

"We will support the right of our sugar industry to compete on equal terms and will utilise well-established global trading rules to defend the interests of our farmers," Trade Minister Simon Birmingham said in a statement.

Birmingham said Australia -- the world's third largest exporter of sugar -- had raised its concerns at senior levels of India's government and was "disappointed our concerns haven't been addressed".

"Whilst we support efforts by countries to develop their agricultural industries, these efforts need to be consistent with their WTO obligations and applied in a manner that doesn't distort global trade."

The government was set to enter formal discussions with India and other World Trade Organisation members at an agriculture meeting in late November.

Other major producers including Brazil -- the biggest producer -- Thailand and Australia, have also blamed India for contributing to a glut in the market that has forced prices down.

Sugar futures in New York have plunged 17 percent this year, according to Bloomberg News.

Birmingham told national broadcaster ABC he hoped the WTO action would be backed by the other countries.

The announcement came two days after Prime Minister Scott Morrison met his Indian counterpart Narendra Modi in Singapore on the sidelines of a regional summit.

Morrison told reporters he wanted to resolve the issue within the framework of the "good relationship" between the two nations.

Australia's Aus$2 billion (US$1.46 billion) sugar industry, which has 4,000 cane farms and 24 sugar mills, is suffering losses as a result of the India subsidies, producers say.

Birmingham told ABC India's actions were costing Australian producers "many millions of dollars in terms of the impact of suppressed prices".