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2021 | Book

Indian Agriculture Under the Shadows of WTO and FTAs

Issues and Concerns

Editors: Dr. Rajan Sudesh Ratna, Dr. Sachin Kumar Sharma, Dr. Radika Kumar, Adeet Dobhal

Publisher: Springer Singapore

Book Series : India Studies in Business and Economics


About this book

This book examines the various issues and concerns faced by Indian agriculture under the obligations of WTO and the Free Trade Agreements. While the issues discussed pertain mainly to India, the lessons can also be derived for many other similarly placed developing countries. The book delves into various aspects of Indian agricultural trade and evaluates the domestic policies and regulations of government while also looking at external factors like WTO, free trade agreements and non-tariff barriers. Chapters of this book have been contributed by eminent agricultural economists, lawyers and social scientists providing the perspective from their sector.

This book highlights the challenges and opportunities for agriculture sector under the rapidly growing regional trade agreements and results of negotiations under the WTO. It also provides critical insights into the ongoing fisheries subsidies negotiations at the WTO and issues relating to non-tariff measures. The findings have broad implications for developing countries in general and India in particular. This book will greatly benefit trade negotiators, policymakers, civil society, farmer groups, researchers, students, and academics interested in issues related to the WTO, FTAs, tariff and non-tariff barriers and other allied issues concerning Indian agriculture. The techniques used in analytical part will mostly benefit the researchers as they can not only use these techniques and methodologies for their future research, but to also carry the research forward. The book is useful for many educational institutes which teach international trade, agricultural economics, and WTO and FTAs studies.

Table of Contents


WTO and Indian Agriculture

Chapter 1. Indian Agriculture under WTO and FTAs: An Assessment
Liberalisation of Indian agriculture under the World Trade Organisation (WTO) and free trade agreements (FTAs) has always been a sensitive issue due to the crucial role played by the sector in economic development, GDP growth and employment. This chapter provides an overview of the WTO’s Agreement on Agriculture and the issues faced by the Indian agriculture sector under its different pillars. In particular, it examines issues of critical importance for India, such as market price support, import surges, food security and special and differential treatment (S&DT) at the WTO, while also providing insights from negotiations. The chapter also deals with agriculture-specific issues in India’s FTAs, providing a broad view of its commitments and assessing trade performance of Indian agriculture over the years. It concludes by stressing the need to level the playing field in agricultural trade at the multilateral and regional level for Indian farmers.
Rajan Sudesh Ratna, Sachin Kumar Sharma, Adeet Dobhal
Chapter 2. Fisheries Negotiations at the WTO: Small Bait for Large Catch
Fisheries subsidies negotiations have been a protracted issue ever since the launch of the Doha Development Agenda in 2001. Members of the World Trade Organization (WTO) have intensified their efforts to conclude the negotiations by the 12th WTO Ministerial Conference to be held in 2021. At present, significant divergences exist between developed and developing countries in the WTO on the formulation of disciplines on fisheries subsidies. This chapter will discuss the key contentious issues of the various fisheries subsidies proposals, including the recent Chair’s text of July 2020. The chapter discusses the major imbalances, including the lack of policy space for development, the imposition of stringent management measures, compromising the rights of developing countries in UNCLOS and the low ambition of special and differential treatment. The chapter further discusses how the existing proposals benefit the market access agenda of the developed economies. It also cautions that a similar scenario of the imbalance experienced by developing countries in the Agreement on Agriculture will be repeated in the existing fisheries subsidies negotiations if the contentious issues remain unresolved in the final agreement. The paper also provides a strategic way forward in relation to a balanced special and differential treatment for member’s consideration.
Radika D. Kumar
Chapter 3. Revisiting the Question of Price and Income Support to Agriculture
A key issue in the foundation and subsequent evolution of the decisions on agricultural trade under the World Trade Organization (WTO) was the question of price and income support to agriculture. It is generally believed that income support, as opposed to price support, is less trade-distorting, which is also reflected in their classification under the Agreement on Agriculture (AoA). Price support is classified under the trade-distorting Amber box, whereas income support is covered by the provisions of the Green box that are considered as minimally trade-distorting. Most developing countries, however, tend to resort to price-support policies due to budgetary constraints and fiscal concerns. Any redistributive policies like the National Rural Employment Guarantee Program though found to be highly effective in bringing up wages and rural income are often critiqued domestically by neoliberals for the financial burden they allegedly place on the exchequer. This study seeks to engage with a particular aspect of critique of price-support policies that claim that income-support policies extended to farmers in developed countries do not distort prices and output. Though this proposition may be valid in a partial equilibrium perfectly competitive model, it is not necessarily valid in an oligopoly or a general equilibrium framework or a Keynesian/Kaleckian macroeconomic setting. Thus, this study makes a modest attempt to demonstrate that income-support measures, like price-support measures are also trade-distorting.
C. Saratchand, Simin Akhter
Chapter 4. Transparency and WTO SPS Notifications: A Case Study of India
WTO members over the years have adopted various sanitary and phytosanitary (SPS) measures in order to protect the human, animal, and plant life. As tariff measures at the border have reduced, the trend for non-tariff measures (NTMs), including SPS and technical barriers to trade (TBT), has significantly increased. These NTMs are important as they also affect trade in agricultural goods. With respect to agriculture, the SPS measures applied need to be transparent and complete in order to assist exporters and importers with information. As a result, there is the need for enhanced transparency provisions to ensure more detailed and complete SPS notifications. Members of the WTO, therefore, will benefit from the examination of the completeness and quality-related test for SPS notifications to ensure smooth trade flow of agricultural products among countries. It is in this context that this study will examine the quality and related issues for SPS notifications for India. The findings of the study show that there have been considerable improvements in India’s quality of SPS notifications over the years, however, some areas need addressing to enhance quality even further.
Marcelo Alonso Valverde Arevalo, Walter Fernando Ibarra Davila

FTAs and Indian Agriculture

Chapter 5. India–UK FTA: Export Prospects for Indian Agriculture
In order to evaluate the impact of a likely India–UK FTA post-BREXIT on select Indian agricultural product exports, the current analysis has adopted a partial equilibrium approach. Since the average tariffs on agricultural products are quite low on an average, we have estimated the impact only for a zero-tariff scenario for all the agricultural items. As a departure from existing work, we have used the recently estimated import demand elasticities at six-digit HS level by Ghodsi et al. (Import Demand Elasticities Revisited. Vienna Institute for International Economic Studies, Vienna, 2016) in our user-defined SMART simulation analysis. In line with evidence from the literature involving north–south agri-trade reform in the presence of NTBs, not much changes are observed even at zero tariffs, and hence other scenarios of partial liberalisation were not attempted. Next, we tried to find out the reasons for low gains from full-tariff liberalisation. Five products were identified where a possible restriction due to NTBs might impact India’s export prospects to the UK. Applying the methodology outlined in Bradford (Rev Econ Stat 85:24–37, 2003), an estimate of NTB restrictiveness was obtained for the identified agricultural products. It corroborated with our initial apprehensions that not only were NTBs high but restrictiveness also went up over time. Hence if the proposed FTA does not address the issue of NTBs, even a full liberalisation in terms of tariffs will not lead to any substantial benefits for Indian agri-exports.
Bibek Ray Chaudhuri, Debashis Chakraborty
Chapter 6. Non-tariff Measures and India’s Agricultural Exports: The Case of India-ASEAN Trade Agreement
The protection accorded to agricultural trade continues to be a contentious issue in the multilateral trade negotiations across the globe. The developed and industrialized countries extend support to their agricultural sector through tariffs, non-tariff barriers, subsidies on inputs and output. These may discourage exports of agricultural products from the developing countries, despite being competitive. The Regional Trade Agreements (RTAs), which proliferated amongst the developing countries, have also done little to reduce the protectionism accorded to agriculture. Taking the case of the Association of Southeast Asian Nations (ASEAN), this chapter examines the degree of protection accorded to agricultural commodities, which among other factors could explain India’s low share in total exports. The findings indicate that among various non-tariff measures (NTMs), measures such as the sanitary and phytosanitary (SPS) may impact agricultural exports the most. The way forward for India is to adopt measures to improve the quality of primary and processed agricultural products, while also upgrading their standards. Exchange of dialogue regarding the transparency and good quality NTMs that perform as a tool to regulate quality of goods is a must.
Abhishek Jha, Seema Bathla
Chapter 7. India–EU FTA: Implications for India’s Marine Products
With the growing trade integration of India with the world, trade in marine products, like any other sector of the Indian economy, has become exposed to heightened international competition. After being stalled for several years, recent calls were made to resume the India–EU FTA negotiations. In India, marine products trade is significant in terms of providing employment to the millions of poor people, and the EU is one of the largest trading partners of India in this sector. In this backdrop, the paper aims to assess the impact of India–EU FTA through trade and economic linkages. The paper seeks to examine the problems faced by Indian exporters of marine product, and the strategies to enhance the marine exports of India under the Indo-EU FTA. The study indicates that though the EU is a major marine export destination of India even today, but its share has been continuously declining over time. Even though the EU imposes relatively lower tariffs on India’s marine products, India faces many constraints in exporting marine products to the EU. Under the proposed India–EU FTA, the present non-tariff barriers, particularly the stringent regulations and standards, need to be addressed so as to reach a mutually beneficial solution.
B. H. Nagoor, Shankar Eiti

Indian Agriculture: Cross-Cutting Issues

Chapter 8. Evaluating the Role of Subsidies in Sustainable Agriculture: A Case Study of India
The issue of agricultural subsidies is contentious due to the complexities that occur through changes in production, consumption and trade patterns. The changes are often criticised for their trade-distortion effects and implications for sustainability. Among other factors, the impact also depends on the type of support provided. Particularly, subsidy on inputs is often used to promote or alter production patterns. In the process, over-application of specific inputs tends to ignore the associated environmental externalities. Although the emission impact of input overuse in agriculture is well acknowledged and attributed to the subsidised nature of inputs, the relationship remains yet to be appraised in the existing literature. This contribution attempts to fill the void by analysing the impact of inputs—measured through their use and the associated subsidy—on net returns for the farmer and the emissions from the agricultural sector. The results are helpful not only to quantify the relationship between subsidised inputs and emissions from agriculture but also to assess the relative impact of inputs in causing emissions from the agricultural sector. A key finding is that the gains in net returns from the use of subsidised inputs are more than offset by the adverse effects of emissions. Furthermore, the use of fertilisers has a more substantial contribution to emissions, in comparison to the effect of electricity consumption on emissions. In view of the relatively significant impact of fertilisers, the use of inorganic inputs demands attention through policy re-orientation. The cash transfers, if linked to the use of organic fertilisers, will be more effective in incentivising the farmers to switch. Simultaneously, the business model for fertiliser manufactures should also be revisited early to transform into semi-organic production arrangements.
Anjali Tandon, Roopali Aggarwal
Chapter 9. The Role of Sustainability and Policy Measures in Export Performance
There have been significant changes in the international trade policy regime in recent years, along with an increasing emphasis on policy alignment and sustainability-related issues. The paper aims to empirically examine the role of sustainability and policy measures in influencing export performance. The study uses the stochastic frontier approach to estimate gravity equation on the export performance of 10 leading world exporters from the Asia Pacific Economic Cooperation (APEC) region over the time period 2012–2017. While the absolute difference in real exchange rates shows trade-inhibiting effects, estimates for reduced tariffs and interdependence among economies suggest trade-enhancing effects and significance in all specifications. There is a conspicuous difference in the export performance from the perspective of intra-regional and inter-regional trade. The study underscores the important role of regional trading blocs in policy alignment and sustainable development.
Shubham Kumar, Tapas Kumar Giri
Chapter 10. Dairy Industry in India Under Trade Liberalisation
India is the largest producer of milk after the USA. It’s fast-growing domestic market for milk and milk products in the world leaves it with a little surplus for external trade. Unlike in developed countries, the dairy sector is yet to be established as an independent economic activity in India. The sector continues to be a supplementary activity to the crop production sector for most of the farmers. Dairy contributes 28% to the Gross Value Added (GVA) in agriculture and allied activities in India. In India, cattle rearing and milk production is a potential source of income for farmers to fall back during a crisis in the crop production sector. However, India’s share in world trade of dairy products is not commensurate with its size of the domestic market and the scale of production. A major bottleneck in the world market is the low productivity of milch animals in India. It is argued that dairying in India is still subsistence in character and growth of the sector is largely driven by domestic demand. The protection available to dairy farmers in the domestic market for dairy products in India has declined under trade liberalisation. This poses a threat to the millions of small-scale farmers employed in the sector. Therefore, government interventions become necessary for supporting the sector.
S. Mohanakumar
Chapter 11. Genetically Modified Crops and Indian Agriculture: Issues Relating to Governance and Regulation
This study investigates the issues related to the commercialisation of genetically modified (GM) crops and examines the regulatory framework for GM crops development and commercialisation in India. It explores the positioning of various organisations and stakeholders that have directly or indirectly influenced this technology and delineates their roles in the technological governance system. The findings of this study show that institutions promoting research and innovation are not appropriately linked with the institutions for its governance and regulation in India. As a result, even after extensive debate and creation of new institutions, there is a persisting situation of antagonism and low public trust in GM technology as a viable solution for India’s agricultural problems. This has impeded the innovation and translation process despite successful field trials of many indigenous GM crop. Further, it underlines that individual and group concerns regarding the environmental, health and economic viability of GM crops as technological intervention can be addressed by promoting it as an alternative in specific conditions only. In conclusion, a group of interventions such as the development of a system to encourage innovation, capacity building and investment in alternate technologies is suggested to equip for the ever-increasing demand of agricultural products in the future.
Anurag Kanaujia, Sujit Bhattacharya
Indian Agriculture Under the Shadows of WTO and FTAs
Dr. Rajan Sudesh Ratna
Dr. Sachin Kumar Sharma
Dr. Radika Kumar
Adeet Dobhal
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Springer Singapore
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