India invokes WTO peace clause for FY25 rice subsidies for farmers

Why in the News?
India has invoked the WTO Peace Clause for the 7th time after exceeding the 10% subsidy limit on rice under World Trade Organization rules. India reported subsidies of about $7.6 billion (11.85% of production value) for 2024–25.

About the Peace Clause
The Peace Clause is a temporary safeguard mechanism adopted at the Bali Ministerial Conference 2013 and later strengthened in 2014. It allows developing countries to exceed the subsidy cap (de minimis limit of 10% of production value) for food security programmes without facing legal challenges from other WTO members.

About De Minimis Limit
Under the Agreement on Agriculture, developing countries like India can provide subsidies up to 10% of the total value of agricultural production. Any breach would normally invite dispute action unless protected under the Peace Clause.

Reason for Invocation
India exceeded the subsidy limit due to its public stockholding programmes aimed at ensuring food security. These programmes involve procurement of crops like rice at Minimum Support Price (MSP) to maintain buffer stocks and support farmers.

Significance
The clause ensures that India’s food security programmes—crucial for millions of farmers and consumers—continue without violating WTO rules. It also highlights the need for a permanent solution on public stockholding at the WTO.

Source: ET