India Toughs It Out In WTO Food-Stockpiling Row

New Delhi/Geneva: India defied other countries on Wednesday in a row over food stockpiling that has crippled attempts to reach a global trade agreement, raising doubts that backroom talks can reach a compromise before a Group of 20 summit this month.

At the end of July, India pulled the plug on implementing a so-called trade-facilitation deal struck in Bali last year, linking it to the issue of rural poverty.

India refuses to bow to foreign calls to scale back a scheme to buy wheat and rice that it distributes to 850 million people. Critics say the food stockpiling amounts to paying farmers to produce food, which is likely to lead to food surpluses that will get dumped on world markets.

India wants to keep a so-called 'peace clause' that protects its huge state food purchases until the World Trade Organization can strike a definitive deal on stockpiling. As originally envisaged in Bali, the clause would expire in four years.

Critics say Prime Minister Narendra Modi's tough line jars with the 'Make in India' pitch he has taken to investors abroad in his first five months in charge. He could find himself isolated at his first G20 summit of world leaders in Brisbane, Australia, on November 15-16.

New Delhi's blockade has plunged the WTO into its worst crisis in two decades.

"India's position on trade facilitation has been completely misunderstood because of unreasonable positioning by some of the developed countries," Finance Minister Arun Jaitley told a World Economic Forum conference in New Delhi.

Mr Jaitley repudiated suggestions that India was fundamentally opposed to trade facilitation, which would entail easing port and customs procedures and, by some estimates, add $1 trillion and 21 million jobs to the global economy.

India has begun backroom efforts to break the deadlock, sending a top trade ministry official to Geneva this week for talks with key WTO members.

Yet economists say WTO members lack any effective means to bring pressure to bear against Asia's third-largest economy, which is home to a sixth of the world population.

"It's an issue that in India is so politicised - you have hordes of the population living in poverty and depending on food aid," said Shilan Shah, an economist who covers India at Capital Economics in London.

"The WTO hasn't really shown the kind of will to move on without India's agreement. What it demonstrates is how important India is to the global trading community."