MUMBAI, July 15 (Reuters): India will keep its sugar export subsidies despite complaints to the World Trade Organisation (WTO) from rival producers Brazil and Australia, though it will tweak how it provides them, four sources directly involved in the matter said. The export subsidies are designed to increase shipments from the world's second-biggest sugar producer and reduce their brimming inventories. But that could pressure global prices that have only eked out a 2.1 per cent gain this year after plunging more than 20 per cent in 2018.
"The industry needs government support for exports. It will be provided without violating the WTO framework," said a senior government official involved in the policy making. "We may need to make some changes in the way we provide incentives."
Government and industry officials did not say what kind of changes they are planning to make, though they said they are seeking guidance from WTO experts.
Years of bumper cane harvests and record sugar production have hammered Indian sugar prices, making it hard for mills to pay money owed to farmers, who form an influential voting bloc.
To reduce that debt and pare rising inventories, New Delhi said in September it would provide incentives to mills for overseas sugar sales and set an export target of 5 million tonnes for the 2018/19 marketing year ending on Sept. 30.
India's exports surged to 3.3 million tonnes from 620,000 tonnes a year earlier.
That prompted rivals to complain at the WTO, alleging the incentives violate trade rules.
The Brazilian government said on Thursday it had asked the WTO to establish a panel aimed at resolving its dispute over Indian sugar subsidies. Australia and Guatemala also lodged complaints on Thursday.
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