New Delhi, May 18: The BJP-led government has decided to accept a WTO draft proposal on farm trade negotiations, which calls upon developing nations to agree to reduce tariff on farm goods by 30-40 per cent wherever the ad-valorem customs duty is over 120 per cent.
The draft also calls for cutting tariffs by 25-35 per cent on farm imports where the customs duty is between 60-120 per cent, by 20-30 per cent on agri-products attracting duties between 20-60 per cent and by 15-20 per cent on those taxed at rates below 20 per cent.
“This means we may make some farm goods importable at zero duty, but will retain the right to take countervailing measures in case of any dumping,” finance ministry officials said.
The finance ministry is now co-ordinating India’s WTO stand, having set up a special cell for this. It functions in collaboration with the commerce ministry, whose job is to look after foreign trade.
Officials said products that are likely to be most affected by new rates to which India will commit itself at the next WTO round, will be edible oil, sugar and oil seeds.
Duty on sugar falls in the 60-120 per cent category and this has to be cut by 30-40 per cent, a steep cut. India currently produces 180 lakh tonnes of sugar against a demand for 150 lakh tonnes, representing at least a temporary glut.
Edible oils are, however, a different story as India has a shortfall there and lower rates may help consumers, though local edible oil millers and growers are unlikely to be happy by moves to lower the duty wall further.
India will, however, make a case that in case of commodities like wheat, rice, coarse grains, edible oils, sugar, dairy products, fruits and vegetables —crucial to its food security — tariffs will need to continue to match high levels of export subsidy by developed states, till the West brings them down.
Besides this, inter-ministerial consultations have decided that Indian negotiators will concentrate on reducing peak tariff rates on farm imports imposed by developed countries, protecting domestic support measures for the Public Distribution System and wresting limited rights to give export support subsidies.
The main issue that will be fought out is the high peak tariffs on imported farm products being charged by the US, Canada, European Union and Cairns group nations like Australia and New Zealand.
About a quarter of the tariff lines on farm products imposed by these nations is at rates of over 30 per cent. These include cereals, sugar, milk and milk products, tobacco, cotton and meat, products in which India is keenly interested.
In contrast, India has already significantly reduced farm tariffs and its rates are at far lower levels. “Our main problem is that of market access. Not only is it being denied by imposing peak rates but also by imposing informal quotas,” top officials said.
The US has been arguing that its average farm goods tariff rate is 12 per cent, but Indian negotiators say that this is a misnomer as a fifth of its farm import tariff rates are in the above 30 per cent category.