G/AG/W/189  
 
16 November 2018  
(18-7217) Page: 1/11 
Committee on Agriculture  Original: English  
 
 
INDIA'S MEASURES TO PROVIDE MARKET PRICE  SUPPORT TO SUGARCAN E 
COMMUNICATION FROM A USTRALIA  
PURSUANT TO ARTICLE 18.7 OF THE AGREEMEN T ON AGRICULTURE  
1  EXECUTIVE SUMMARY  
1.1.  We have a significant interest in ensuring a transparent and predictable global trading system, 
underpinned by a shared understanding of Members' obligations under WTO rules. Under Article  18.7 
of the Agreement on Agriculture (AoA), we seek further clarification from India on its domestic 
sugarcane and sugar policies. Historically, as the wor ld's second largest sugar producer and fourth 
largest exporter1, dynamics in India's sugar market have significant implications for both prices and 
trade in the global market.  
1.2.  Each sugar season, the Government of India sets the Fair and Remunerative Price (FRP) for 
sugarcane as defined in the Sugarcane (Control) Order (1966). The FRP is an administered price 
that effectively acts as a floor price for sugar mills to pay farmers f or sugarcane. In addition, farmers 
are paid premiums for increased production efficiency, and are eligible for additional payments by 
sugar mills under specific State -level support. For the purpose of this paper, the premium payments 
and State -level suppor t, as well as other sugar -related subsidies, have been excluded from the 
calculations of Market Price Support (MPS) and Aggregate Measurement of Support (AMS) for 
sugarcane, but are discussed separately in paragraphs 4.21 – 6.3. 
1.3.  India has not included suga rcane, or its derived products, in any of its domestic support 
notifications since 1995 -96. Therefore, there is no evidence provided to the WTO from the 
Government of India to compare with the findings of this paper.  
1.4.  Using the latest publicly available in formation, this paper compiles data on India's MPS for 
sugarcane over the period 2011 -12 to 2016 -17. MPS has been calculated in accordance with the 
domestic support provisions of Annex 3 of the AoA. Under Article 6, paragraph 4 of the AoA, India 
is limited  to providing a product -specific AMS for sugarcane no greater than 10% of the total value 
of production of sugarcane. This follows from the fact that India has no Total AMS (or reduction 
commitments) in Part IV of its Schedule (XII).  
1.5.  Based on the evidence outlined in this paper, it appears that over the six -year period, India 
has provided sugarcane AMS vastly in excess of the limits set out in Article 6, paragraph 4 of the  AoA 
(10% of the total value of production of sugarcane). This is set out in Table 1 i n the form of MPS in 
Indian Rupees, US dollars and as a percentage of the value of sugarcane production.  
Table 1 – Apparent Market Price Support (Indian Rupees Millions, USD Millions and % of 
value of sugarcane production)  
 2011 -12 2012 -13 2013 -14 2014 -15 2015 -16 2016 -17 
% of value of  production  77.7%  77.1%  94.1%  94.4%  99.8%  94.4%  
Millions, Rupees  467,124  526,758  684,508  740,551  747,017  656,163  
Millions, USD2 9,332  9,403  11,444  11,832  11,375  9,918  
                                                
1 USDA Foreign Agricultural Service (May 2018), Sugar: World Markets and Trade: 
https://apps.fas.usda.gov/psdonline/circulars/sugar.pdf . 
2 USD/INR exchange rates converted using financial year averages from IMF International Financial 
Statistics: http://data.imf.org/?sk=4C514D48 -B6BA -49ED -8AB9 -52B0C1A0179B . G/AG/W/189  
 
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  2  INTRODUCTION AND SCO PE OF ANALYSIS  
2.1.  Under Article 18.7 of the AoA, we are sharing this analysi s with India and with other 
WTO Members to seek further clarification surrounding India's domesti c sugarcane and sugar 
policies,  including any potential domestic support implications under the AoA.  
2.2.  Using Government of India and other public sources, this paper compiles information on 
India' s MPS for sugarcane over the period 2011 -12 to 2016 -17. The analysis is limited to India's 
MPS for sugarcane only and does not attempt to calculate the full value of India's Current Total AMS. 
The limited period (six  years) of this analysis does not imply that no sugarcane support was provided 
before 2011 -12. 
2.3.  India has not included sugarcane or sugarcane products in any of its domestic support 
notifications since ma rketing year 1995 -96 (G/AG/N/IND/1). This paper relies on publicly available 
information from the Government of India and AGST Supporting Tables submitted by India during 
the Uruguay Round (G/AG/AGST/IND). The methodology, calculations and findings of this  analysis 
are outlined in the remainder of this paper.  
2.4.  For the purpose of this notification, this paper includes an MPS analysis at the central 
government level only. The calculations are therefore based on the Government of India's sugarcane 
and sugar pri ce policies and exclude India's State -level support.  
2.5.  Preliminary analysis of India's State -level support provides an indication of the magnitude of 
this support (see paragraph 4.23). The inclusion of State Advised Prices (SAP) in the analysis would 
signif icantly increase the amount of MPS provided. For example, the SAP program me of the three 
major sugar producing States (Uttar Pradesh, Maharashtra and Karnataka) would increase the total 
level of Indian MPS by Rs 122,486 million (an 18.7%3 increase in the l evel of MPS) in 2016 -17 alone.  
3  BACKGROUND ON INDIA' S SUGARCANE AND SUGA R SECTOR  
3.1.  As outlined in paragraph 1 .1, as the world's second largest sugar producer and fourth largest 
exporter4, dynamics in India's sugar market have significant implications for both  prices and trade 
in the global market. The Cabinet Committee on Economic Affairs, on the advice of the Government 
of India's Department of Food & Public Distribution, has historically set a minimum price under the 
Sugarcane (Control) Order (1966). In Octo ber 2009, the Order was amended to replace the concept 
of a Statutory Minimum Price with  a "Fair and Remunerative Price (FRP) " for the 2009 -10 and 
subsequent sugar seasons. The FRP acts as a floor price for sugarcane farmers, even when sugar 
prices fall to  levels that would generate sugarcane prices below the FRP. As seen in India's AGST 
document, the price set by government is the applied administered price (AAP) in the 
MPS calculation.  
3.2.  Clause 3 of the Sugarcane (Control) Order (1966) (the Order) refers t o a minimum price of 
sugarcane payable by a producer of sugar. Specifically, Clause 3(1) states:  
'The Central Government may, after consultation with such authorities, bodies or 
associations as it may deem fit, by notification in the Official Gazette, from time to time, 
fix the minimum price of sugarcane to be paid by producers of sugar or their 
agents  for the sugarcane purchased by them …' (emphasis added) . 
3.3.  In addition, the Explanation in the Order states that different prices may be for fixed for 
different areas, qualities or varieties of sugarcane. However, these prices cannot be less than the 
FRP set  by the Government of India. Explanation (2) of Clause 3 states:  
'[n]o person shall sell or agree to sell sugarcane to a producer of sugar or his agent, 
and no such producer or agent shall purchase or agree to purchase sugarcane, at a 
price lower than tha t fixed under sub -clause (1) ' (emphasis added) . 
                                                
3 This f igure is the percentage increase in the level of MPS (in Rupees). It is not a percentage point 
increase in the MPS as a percentage of the total value of production.  
4 USDA Foreign Agricultural Service (May 2018), Sugar: World Markets and Trade: 
https://apps.fas.usda.gov/psdonline/circulars/sugar.pdf . G/AG/W/189  
 
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  3.4.  The Sugarcane (Control) Order (1966)  extends to the whole of India and does not include any 
quantity restrictions on the amount of sugarcane eligible to access the program me. The Government 
of India announces  the FRP in the months leading up to the commencement of the Indian sugarcane 
season (Oct -Sep). This provides sugarcane producers and sugar millers with time to make 
commercial decisions regarding the production and milling of sugarcane.  
3.5.  In addition, as the low price of sugar has affected profitability of sugar mills, the Government 
of India has taken various measures to subsidise the payment of arrears to sugarcane producers for 
previous sugar seasons. For the purpose of this paper, the a nalysis excludes the Government of 
India's financial assistance for arrears payments. Figure 1 below illustrates the flow of payments 
under the Government of India's sugarcane support policies.  
Figure 1: Government of India sugarcane support policies  
 
 
4  EXPLANATION OF APPAREN T FINDINGS  
4.1  AGREEMENT ON AGRICULTURE (AoA) – AMS LIMITS  
4.1.  Article 7, paragraph 2(b) of the AoA states that "[w]here no Total AMS commitment exists in 
Part IV of a Member's Schedule, the Member shall not provide support to agricultural prod ucers in 
excess of the relevant de minimis  level set out in paragraph 4 of Article 6". India has no Total AMS 
commitment (or reduction commitments) in Part IV of its Schedule (XII).  
4.2.  Annex 3 of the AoA identifies support that "shall" be included in a Member 's AMS calculation. 
It states, "an Aggregate Measurement of Support (AMS) shall be calculated on a product -specific 
basis for each basic agricultural product receiving market price support, non -exempt direct 
payments, or any other subsidy not exempted from  the reduction commitment ("other non -exempt 
policies")". In addition, Annex 3, paragraph 7 of the AoA states, "[m]easures directed at agricultural 
processors shall be included to the extent that such measures benefit the producers of the basic 
agricultura l products. "  
4.3.  Therefore, India's MPS for sugarcane through the mandating of the FRP is a form of non -exempt 
domestic support, given that sugar mills are required to pay cane farmers the AAP, and this MPS 
must be included in India's sugarcane AMS (see Figur e 1). 
4.4.  A developing country Member can exclude from Current Total AMS any product -specific AMS 
that does not exceed 10% of the product's total value of production. This is known as the de minimis  
exemption. If India provides product -specific AMS support for  sugarcane in excess of 10% of the 
G/AG/W/189  
 
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  annual total value of production of sugarcane, Article 6, paragraph 4 of the AoA does not allow the 
exemption of that sugarcane AMS from the Current Total AMS.  
4.2  PRINCIPLES FOR CALCULATING MPS  
4.5.  The definition of market price  support is referenced in Annex 3, paragraph 8 of the AoA:  
[M]arket price support shall be calculated using the gap between a fixed external 
reference price and the applied administered price multiplied by the quantity of 
production eligible to receive the  applied administered price.  
4.6.  Therefore, "market price support" requires a comparison between the "applied administered 
price" (AAP) and the "fixed external reference price". An administered price is a price fixed by 
Government to determine domestic market prices. The "fixed external reference price" is defined in 
Annex 3, paragraph 9 of the AoA, which states that this price "shall be based on the years 1986 to 
1988". The difference between the AAP and fixed external reference price is then multiplied by the  
"quantity of production eligible to receive the applied administered price."  
4.7.  The calculation provided in Annex 3, paragraph 8 of the AoA for market price support can be 
re-produced in the following equation:  
(Applied Administered Price – Fixed External Re ference Price) * Quantity of Production 
Eligible = Value of Market Price Support  
4.8.  As previously outlined in G/AG/W/174, the Appellate Body in Korea -Beef reached the same 
understanding of the meaning of "market price support" under Annex 3, paragraph 8 of the AoA. 
Specifically, the Appellate Body confirmed the Panel's interpretation that  "production eligible to 
receive the applied administered price" has "a different meaning in ordinary usage from production 
actually purchased. " The Appellate Body further defined "eligible" as that which is "fit or entitled to 
be chosen." It also noted, " [p]roduction actually purchased may often be less than eligible 
production ". 
4.9.  Thus, "eligible production" within the meaning of Annex 3, paragraph 8 of the AoA, is production 
that is fit or entitled to receive the applied administered price.  
4.3  INDIA'S SUGARCA NE MPS  
4.3.1   Applied Administered Price (AAP)  
4.10.   As outlined in paragraph 3.1 and 4.6, the AAP is a price fixed by policymakers in order to 
determine domestic market prices. In India, the Cabinet Committee on Economic Affairs sets the 
applied administered price (AA P), also known as FRP, under the Sugarcane (Control) Order (1966).  
4.11.   The FRP is set based on recommendations from the Commission for Agricultural Costs and 
Prices and in consultation with both the states and industry. To improve production efficiency via 
higher sugar recoveries, the FRP is payable based on a basic recovery level, which had been 9.5%5 
for each sugar season up to 2017/18, but was recent ly increased to 10% for 2018/196. For every 
0.1 percentage point above the basic recovery level, farmers ar e eligible for an additional premium 
payment.  
4.3.2   External Reference Price  
4.12.   As stated in the AoA (Annex 3, paragraph 9):  
'the fixed external reference price shall be based on the years 1986 to 1988 and shall 
generally be the average f.o.b. unit value for the ba sic agricultural product concerned 
in a net exporting country and the average c.i.f. unit value for the basic agricultural 
                                                
5 The sugar recovery level is the percentage of sugar produced relative to the amount of sugarcane 
crushed.  
6 Media Release – Fair and Rem unerative Prices of Sugarcane – 31 July 2018, India 's Ministry of 
Consumer Affairs, Food and Public Distribution, Press Information Bureau, Government of India.  G/AG/W/189  
 
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  product concerned in a net importing country in the base period. The fixed reference 
price may be adjusted for quality differences as  necessary.'  
4.13.   The sugarcane external reference price (ERP) is included in India's AGST supporting tables 
submitted during the Uruguay Round7. Based on the average of the 1986 -1989 sugarcane seasons, 
India's ERP included in supporting table is 156.16 Indian Rupees per tonne8.  
4.3.3   Eligible Production  
4.14.   As outlined above, Annex 3, paragraph 8 of the AoA, the gap between the AAP and ERP must 
be multiplied by the '…quantity of production eligible to receive the administered price' .  
4.15.   The Sugarcane (Control) Order does not limit production for accessibility to the program me. 
In addition, in the Korea – Beef case, the Appellate Body defined eligible production as that which is 
"fit or entitled to be chosen. " The Appellate Body also shared the Panel's conclusion that 'the actual 
quantity of purchases is not relevant in the calcu lation of market price support'9.  
4.16.   Therefore, eligible production should include all sugarcane eligible to receive the AAP, 
regardless of whether or not the sugarcane was actually delivered to sugar mills for crushing under 
the Sugarcane (Control) Order. Based on this information, the analysis has included total Indian 
sugarcane production. As an administered price, the FRP has an impact on commercial operations 
of both sugar millers and sugarcane far mers and disrupts the price signals and market forces of 
supply and demand. Recent media reporting highlights the distortive effective of AAPs and 
government incentives, with reports there is an 'increasing shift to safer crops like paddy and 
sugarcane in anticipation of further hike in minimum support prices (MSP) and other government 
doles'.10  
4.17.   India's AGST Supporting Tables (G/AG/AGST/IND) and 1995 -96 domestic support notification 
(G/AG/N/IND/1) appear to refer to eligible production figures of sugarcane for sugar production 
only. These figures exclude the proportion of sugarcane that flows to khandsari, gur and other 
feed/seed products.11 Based on the findings of Korea -Beef, it appears as though the incorrect figures 
for eligible production have been used in both the AGST Supporting Tables and the 1995 -96 domestic 
support notification. While this discrepancy is not a factor over the period from 2011 -12 to 2016 -17, 
due to the absence of any reporting of MPS since 1995 -96, it is an issue worth highlighting.  
4.18.   Figure 2 below provides an illustrative example of India's sugarcane MPS for 2016 -17. The 
calculations underlying this figure are outlined in Table 4. In 2016 -17, India's total MPS for sugarcane 
reached an estimated Rs 656,163 million (USD  9.9 billion). Thi s figure represents 94.4% of the total 
value of India's sugarcane production and exceeds India's de minimis  limit of Rs  69,526 million 
(USD  1.1 billion).  
                                                
7 Supporting Tables Relating to Commitments on Agricultural Products in Part IV of the Schedule s 
(G/AG/AGST/I ND - Supporting Table A, pg.28) 
https://www.wto.org/english/tratop_e/agric_e/schedule_e/ind.pdf . 
8 The ERP was converted from international prices of sugar using a recovery rate of 8.5% for 
comparison with domestic support price of sugarcane.  
9 https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds161_e.htm . 
10 https://www.business -standard.com/article/economy -policy/farmers -shifting -to-safer-paddy -cane-
from-riskier -crops -to-boost -income -118101800703_1.html . 
11 In 1995 -96, sugar production was 62% of total sugarcane production (see source: Indira Gandhi 
Institute of Development Research, November 2013  http://www.igidr.ac.in/pdf/publication/WP -2013-024.pdf . G/AG/W/189  
 
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  Figure 2: Breakdown of Market Price Support (MPS) for Sugarcane, 2016 -17*  
 
* Price and volume inputs  are references in Columns A -C in Table 4 . 
 
4.4  DIFFERENCES WITH INDIA'S CALCULATIONS  
4.19.   India has not notified the value of its MPS for sugarcane since marketing year 1995 -96 
(G/AG/N/IND/1). Therefore, direct comparison between India's domestic support notificat ions and 
the analysis in this paper is not possible. In India's 1995 -96 domestic support notificatio n, total MPS 
for sugarcane was USD 184 million, with eligible production based on sugarcane for sugar production 
only.  
4.5  EXCHANGE RATE DIFFERENTIAL  
4.20.   As ident ified in G/AG/W/174, India's AGST Supporting Tables (G/AG/AGST/IND) are published 
in Indian rupees. However, India's domestic support notifications are denominated in US dollars. To 
be consistent with India's scheduled commitments under the AoA, and given the FRP is set in Indian 
Rupees, this paper has calculated India's MPS based on Indian Rupees.  
4.6  INCLUSION OF PREMIUM ABOVE 9.5% RECOVERY RATE  
4.21.   As referred to in paragraph 4.11, the FRP is dictated by the Government of India in 
consultation with industry and  the States. However, the FRP does not include the additional 
payments provided to those farmers exceeding the 9.5% recovery level. This paper's use of an AAP 
equal only to the FRP does not imply that a full calculation of India's sugarcane MPS can ignore the 
higher AAP that effectively results from the higher prices attached to sugarcane of higher recovery 
levels.  
G/AG/W/189  
 
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  4.22.   As outlined in paragraph 4.11, Indian farmers are eligible for a premium payment for every 
0.1 percentage point they recover above 9.5%. Over the period 2011 -12 to 2016 -17, the average 
Indian recovery rate (10.3%) exceeded the 9.5% benchmark recovery rate. While this paper does 
not consider additional premium payments to calculate the total MPS, the  additional MPS from 
premium payments is significant (see Table 2). For example, in 2016 -17, the premium paid to 
farmers for every 0.1 percentage point above the minimum recovery rate (9.5%) was Rs 24.2 per 
tonne. Based on the nation -wide sugarcane recover y rate during the 2016 -17 season (10.51%), 
Indian farmers were eligible for an a dditional Rs 74,809 million (USD  1.1 billion) in premium 
payments or 10.8% of total sugarcane production value.  
Table 2 – Apparent Market Price Support for Premium Program (Indian Rupees Millions, 
USD Millions and % of value of sugarcane production)  
 2011 -12 2012 -13 2013 -14 2014 -15 2015 -16 2016 -17 
% average recovery rate12 10.26%  10.01%  10.27%  10.44%  10.51%  10.51%  
Millions, Rupees  41,981  31,148  59,924  79,018  85,167  74,809  
Millions, USD13 839 556 1,002  1,262  1,297  1,131  
% of sugarcane production 
value  7.0%  4.6%  8.2%  10.1%  11.4%  10.8%  
 
4.7  THE IMPACT OF STATE ADVISED PRICES  
4.23.   As stated in paragraph 1.2, the impact of State -level support  has been excluded from the 
MPS calculations in this paper, although a full calculation of MPS for sugarcane obviously would also 
include the support through State Advised Prices (SAP).  
4.24.   A number of sugarcane producing States have instit uted a higher SAP than the FRP. The SAP 
creates even further distortions in the market as it excludes linkages to recovery rates and does not 
take into account domestic and international conditions (unlike the FRP). India's Commission for 
Agricultural Cost s and Prices reported in August 201714 that: 
"Some state governments announce the SAP, which is much higher than the FRP. This 
creates a distortion in the industry because SAP is neither linked to sugar recovery nor 
it takes in to account domestic and globa l prices and other relevant parameters. As a 
result, when sugar prices are low, mill owners are unable to pay to farmers resulting in 
delayed payment, huge cane arrears and trust deficit between farmers and millers. 
Therefore, FRP must be implemented in al l states and announcement of SAP by states 
should be stopped immediately. In case, where the state governments decide to 
continue with SAP, the difference between SAP and FRP should be paid by the state 
government directly to farmers."  
4.25.   The inclusion of SAP  in the analysis would significantly increase the amount of calculated MPS. 
For example, the SAP program me of the three major  sugar producing States (Uttar Pradesh, 
Maharashtra and Karnataka) would increase the total level of Indian MPS by Rs  122,486 million (an 
18.7%15 increase in the level of MPS) in 2016 -17 alone.  
4.26.   Figure 3 below provides further details of MPS for Uttar Pradesh, Maharashtra and Karnataka. 
The MPS for each State consists of two separate components:  
• MPS based on the national AAP (or FRP); and  
                                                
12 Price Policy for Sugarcane – 2018-19 Sugar Season ', Commission for Agricultural Costs and Prices, 
Department of Agriculture, Cooperation and Farmers Welfare, Ministry of Agriculture and Farmers Welfare, 
Government of India, August 2017 - 
http://cacp.dacnet.nic.in/ViewQuestionare.aspx?Input=2&DocId=1&PageId=41&KeyI d=622 .   
13 USD/INR exchange rates converted using financial year averages from IMF International Financial 
Statistics: http://data.imf.org/?sk=4C514D48 -B6BA -49ED -8AB9 -52B0C1A0179B .  
14 'Price Policy for Sugarcane – 2018-19 Sugar Season', Commission for Agricultural Costs and Prices, 
Department of Agriculture, Cooperation and Farmers Welfare, Ministry of Agriculture and Farmers Welfare, 
Government of India, August 2017 - 
http://cacp.dacnet.nic.in/ViewQuestionare.aspx?Input=2&DocId=1&PageId=41&KeyId=622 . 
15 This figure is the percentage increase in the level of MPS (in Rupees). It is not a  percentage point 
increase in the MPS as a percentage of the total value of production.  G/AG/W/189  
 
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  • additional support based on the difference between the SAP and the FRP.  
4.27.   It is unclear whether the States require sugar mills to pay sugarcane producers the full value 
of the SAP or only the additional difference between the SAP and FRP. A s a conservative estimate, 
this paper has assumed the latter. If the States require sugar mills to pay the entire SAP in addition 
to the FRP, this would increase India's total MPS significantly. The extent to which the SAP exceeds 
the FRP can result in a v ery significant additional component of the MPS for sugarcane in some 
states, as illustrated in Figure 3.  
Figure 3: Market Price Support (MPS) for selected States  
 
 
5  2017 -18 AND 2018 -19 SUGAR SEASONS AND MP S 
5.1.  As discussed in paragraph 2.2, the analysis in  this paper co vers the sugarcane seasons 
from 2011-12 to 2016 -17. However, the most recent FRP announcements made by the Government 
of India for the 2017 -18 and 2018 -19 sugar seasons are worth additional consideration. While value 
of production estimates f rom India's Ministry of Statistics and Programme Implementation are not 
yet available for the 2017 -18 and 2018 -19 seasons, based on the Government of India's FRP 
announcements and advanced sugarcane production estimates, an estimate of MPS for 2017 -18 and 
2018-19 can be derived (see Table 3).  
G/AG/W/189  
 
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  Table 3 – Decomposition of Estimated Market Price Support - 2016 -17 to 2018 -19 
 Applied 
Administrative 
Price  
(Rupees per 
tonne)16 
(A) External 
Reference 
Price  
(Rupees per 
tonne)  
(B) Eligible 
Production 
(million tonnes)17 
 
 
(C) MPS 
(million 
Rupees)  
 
= [(A) -
(B)]*(C)  % increase on 
2016 -17 level 
of MPS  
2016-17 2,300  156.16  306.069  656,163  - 
2017-18 2,550  156.16  376.905  902,250  38% 
2018-19 2,750  156.16  383.892  995,754  52% 
 
5.2.  The rise in both the FRP and sugarcane production between 2016 -17 and 2017 -18, increases 
the level of the total MPS for sugarcane by Rs 246,087 million (an increase of 38%). Early estimates 
for the 2018 -19 sugarcane season indicate a further increase in th e total level of Indian MPS to 
Rs 995,754 million (an increase of 52% on the total level of sugarcane MPS in 2016 -17). 
6  CANE PRICE ARREARS &  THE USE OTHER TRADE  DISTORTING MEASURES  
6.1.  While the scope of this analysis is limited to India's MPS for sugar cane, a s defined in 
paragraph  1.2, there are a number of other Government of India measures, which provide support 
to India's sugar industry that are excluded from this analysis.  
6.2.  The Government of India has introduced a number of measures to improve financial co nditions 
for both sugarcane producers and sugar millers. The low -level of sugar prices over the past few 
years has reduced the ability for sugar mills to pay sugarcane producers the FRP. The Government 
of India has acknowledged the implications of excessiv e sugar stocks in a number of publications:  
'Sustained surplus production over domestic consumption in the past 6 sugar seasons 
had led to subdued sugar prices, which had stressed the liquidity position of the industry 
throughout the country leading to bui ld up of cane price arrears.18' 
'Due to excess carryover stocks and indication of similar excess production in the 
ensuing sugar season 2018 -19, the liquidity problem of the sugar mills is likely to persist 
in the coming sugar season too. As a result, cane price arrears of sugarcane farmers 
may also peak at unprecedented high level.19' 
6.3.  To mitigate the impacts of surplus sugar, the Government of India has announced a number 
of trade distorting measures over the past few years:  
• introduction of a compulsory Minimum Indicative Export Quota (MIEQ)  for sugar mills 
(5 million tonnes in 2018 -19, and 2 million tonnes in 2017 -18); 
• access to Duty -Free Import Authorization  which reduces sugar import duties to zero 
over a three -year period, for sugar mills which have e xported sugar during a specified 
season;  
• freight support to facilitate export of sugar  based on the distance of a sugar mill from 
the closest port;  
• a performance -based financial assistance  (Rs 138.8 in 2018/19, and Rs 55 in 2017/18 
per tonne of cane crushe d) contingent on mills undertaking exports and supplying ethanol;  
• a fixed minimum domestic selling price  of white/refined sugar of Rs 29 per kg;  
                                                
16 Department of Food and Public Distribution – Sugar and Sugarcane policy: http://dfpd.nic.in/sugar -
sugarc ane-policy.htm . Cabinet Committee on Economic Affairs: Press Release: 18 July 2018: 
http://pib.nic.in/PressReleaseIframePage.aspx?PRID=1539077 . 
17 First Advance Estimates of Production of Commercial Crops for 2018 -19 – Department of Agriculture, 
Cooperation and Farmers Welfare:  https://eands.dacnet.nic.in/A dvance_Estimate/1st_Adv_Estimates2018 -
19_Eng.pdf . 
18 Department of Food and Public Distribution – Sugar and Sugarcane policy: http://dfpd.nic.in/sugar -
sugarcane -policy.htm . 
19 Press Information Bu reau – Government of India, Cabinet Committee on Economic Affairs: 
http://pib.nic.in/newsite/PrintRelease.aspx?relid=183700 . G/AG/W/189  
 
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  • extending working capital loans for sugar mills under the Scheme for Extending 
Financial Assistance to Sugar Un dertakings  and extending financial assistance under 
the Soft Loan Scheme ; and  
• facilitated supply of ethanol under Ethanol Blended Petrol (EBP) Programme  by fixing 
the remunerative price and waiving excise duties for producers.  
7  CONCLUSION  
7.1.  Table 4 below prov ides a breakdown of the calculations to derive India's MPS for sugarcane 
over the period 2011 -12 to 2016 -17. As referred to in paragraph 2.3, India has not provided any 
domestic support notifications for sugarcane since 1995 -96. Therefore, direct compariso n against 
India's domestic support notifications is not possible.  
7.2.  It appears that over the six -year period, India has provided sugarcane AMS vastly in excess of 
the limits set out in Article 6, paragraph 4 of the AoA (10% of the total value of production o f 
sugarcane). As highlighted in paragraph 4.25, if India's SAP program mes were included, these 
figures would be even higher.  
7.3.  We are ready to engage in discussions with India and other Members regarding the significance 
of India's MPS and resulting AMS for  sugarcane, as well as the other trade distorting measures to 
facilitate sugar exports, and their impact on global sugar markets.  
  
  G/AG/W/189  
 
- 11 - Table 4: Market Price Support (MPS) for Sugarcane, 2011 -12 to 2016 -17 
Marketing Year  (A) (B) (C) (D) (E) (F) 
Applied 
Administered Price 
(AAP)1 
 
(Rs./MT)  External 
Reference Price 
(ERP)2 
 
(Rs./MT)  Eligible Production3 
 
 
 
(Million MT)  Total Market Price 
Support (MPS)  
 
 
(Million Rs.)  Value of 
Production (VoP)4 
 
 
(Million Rs.)  MPS/VoP  
    ((A)-(B))*(C)   (D)/(E)  
2011/12  1,450  156.16  361.037  467,124  601,390  77.7%  
2012/13  1,700  156.16  341.200  526,758  682,790  77.1%  
2013/14  2,100  156.16  352.142  684,508  727,770  94.1%  
2014/15  2,200  156.16  362.333  740,551  784,330  94.4%  
2015/16  2,300  156.16  348.448  747,017  748,790  99.8%  
2016/17  2,300  156.16  306.069  656,163  695,260  94.4%  
1 Applied Administered Price is the Fair and Remunerative Price (FRP) for sugarcane at a basic recovery level of 9.5% – http://dfpd.nic.in/sugar.htm  - 
Department of Food & Public Distribution, Ministry of Consumer Affairs, Food and Public Distribution, Government of India .  
2 External Reference Price of sugarcane at a basic recovery rate of 8.5% – page 29, India’s Supporting Tables Relating to Commitments on Agricultural Products 
in Part IV o f the Schedules – G/AG/AGST/IND.  
3 Eligible Production is the total production of sugarcane in India – First Advance Estimates of Produc tion of Commercial Crops for 2018 -19 – Department of 
Agriculture, Cooperation and Farmers Welfare: https://eands.dacnet.nic.in/Advance_Estimate/1st_Adv_Estimates2 018-19_Eng.pdf . 
4 Value of Production for sugarcane based on current prices - Government of India, National Accounts Statistics 2018, Chapter 8, Statement 8.1.2 - Crop-wise 
value of output - http://www.mospi.gov.in/sites/default/files/reports_and_publication/statistical_publication/National_Accounts/NAS18/S8.1.2.pd f. 
 
 
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