India tells WTO its farm import quotas went unused due to weak demand
India informed the WTO that it hasn't blocked imports of certain agricultural products. The unutilized quota for these goods indicates that market conditions, not protective measures, drive import patterns, with domestic production satisfying demand.
New Delhi: India has informed the World Trade Organization that it has not blocked any member nation from exporting milk and cream powders, maize, mustard and rapeseed oil, or sunflower oil into the country, but the WTO-notified quota windows for the farm goods were largely unutilized in FY25.
This implies India’s agricultural import patterns were driven by market fundamentals and tariff decisions, rather than any protective restrictions. According to a WTO paper, reviewed by Mint, not a single application was received for three of the four tariff rate quotas (TRQs), indicating that the mechanism has not been used due to tariff conditions and domestic market dynamics.
India has set a quota of 10,000 tonnes for milk and cream powders and 500,000 tonnes for maize. India levies an in-quota tariff of 15% on skimmed milk and cream powders and on maize (corn), which is very attractive, said Abhijit Das, former head of the Centre for WTO Studies in New Delhi.
“Domestic production is sufficient, so there is no demand for imported products. The second aspect is the way quota administration works. The procedures laid down by India can be a bit cumbersome for importers, and that may be one reason why they remain unfulfilled," said Das.
Over the past decade, India’s dairy sector has shown robust growth. Milk production rose 63.56% from 146.30 million tonnes in 2014-15 to 239.32 million tonnes in 2023-24. This means the country has maintained an impressive annual growth rate of 5.7% over the last 10 years, as per official data. It shows that India continues to be the largest milk producer in the world.
For maize, the agriculture ministry data showed that India harvested 43.41 million tonnes in FY25, up from 37.66 million in FY24.
The lack of demand reflected stable domestic supplies and the absence of any price advantage through the quota route.
In the case of mustard and rapeseed oil, the most-favoured nation (MFN) tariff was the same as the in-quota tariff, leaving no incentive for traders to import under the TRQ.
As a result, the 832 tonnes reported in India’s submission represents general imports for mustard and rapeseed and not utilization of the tariff quota. The quota for the commodity is 150,000 tonnes.
A quota is a fixed quantity of goods allowed to be imported at a lower tariff, while the MFN tariff is the standard one a country applies equally to all WTO members.
The sharpest divergence, however, was seen in sunflower oil. Despite a TRQ of 150,000 tonnes, total imports crossed 3.5 million tonnes during the year, more than 20 times the quota limit, as per the paper.
The paper clarifies that India’s applied MFN tariff on crude sunflower oil was lower than the in-quota rate in FY25. Importers, therefore, avoided the quota route entirely and imported freely at the lower duty. Under the WTO rules, the fill rate is capped at 100% even if actual imports far exceed the quota.
The trend highlights how tariff policy, rather than TRQs, drove India’s food import profile in FY25. With edible oil inflation remaining a concern, the government repeatedly lowered import duties to cool domestic prices, making the TRQ framework redundant. “When the applied tariff becomes cheaper than the in-quota tariff, traders naturally ignore the quota," said Abhash Kumar, a trade economist.
topics
