WTO’s Rulebook is a Blow to Indian Farmers - it Favours the Rich and Punishes the Poor

In India, 45.76% of the total workforce is engaged in agriculture and allied sectors, yet the sector contributes only around 15% to the GDP. Despite this backbone role, Indian farmers receive just USD 56.2 billion in subsidies – roughly USD 468 per farmer across 120 million people. In contrast, 2 million farmers in the United States of America share USD 141 billion, pocketing an average of USD 70,500 each. The World Trade Organization (WTO) caps India’s direct farm aid at 10% of production value, while allowing developed nations like the US to exploit uncapped Green Box subsidies, including support for GM crops like corn. 

Meanwhile, Indian farmers are barred from using HTBT cotton and other modern tools, leaving them shackled in an increasingly competitive global market. In 2022 alone, 11,290 farmers and agricultural labourers in India died by suicide. These aren't just statistics – they're a warning because beneath the surface lies a deeper injustice: a global trade system that rewards wealth and punishes the poor.

That's the reality of the WTO subsidy rulebook. This is not a rulebook for Indian farmers, it is a suicide book where India can give up to 10% of the value of agricultural production as a subsidy, while the US is capped at 5%. Although it appears fair on paper, in reality it benefits rich farmers of the USA and punishes the poor farmers of India. 

This article aims to explore how a seemingly neutral global system stacks the deck against India’s millions of farmers, turning promises of fair trade into a rigged game.

WTO’s uneven playing field

The WTO governs global trade and makes rules for smoother market functioning and helps to promote economic growth in the world economy. It decides how much subsidy the government gives to their farmers and puts subsidies in different boxes. The first box is the “Amber box" which includes support related to agriculture. To keep trade fair, WTO puts a limit of up to 5% of the value of their total agricultural output on the subsidies that developed nations like the USA are allowed to give. Meanwhile, developing nations like India can give up to 10%. 

This may sound like a better deal for India but only until you start crunching the numbers.

Here’s the economic paradox behind the percentage:

The USA’s farming sector produces around USD 500 billion yearly, 5% of which means around USD 25 billion. According to the Amber box subsidies rule, this is 2 million for less than a percentage of their population, roughly coming to USD 12,500 per farmer. 

For India, on the other hand, the output is around USD 550 billion – its 10% would be roughly around USD 55 billion. However, with the 120 million farmers that is merely USD 458 each, less than 3% what US farmers get. This is like waiving off a billionaire’s loan while giving a struggling farmer a lecture on self-reliance and then claiming both received equal support. 

The unfairness goes even deeper. The dollar in India buys more than in the USA but even after adjusting that, India's support per farmer barely covers seed and fertiliser. Meanwhile, farmers in the USA get USD 130 billion more green box subsidies with no cap. These include things like insurance and agriculture infrastructure, which helps to boost their exports and reduces prices in the global market. While India’s minimum support price (MSP) which is used to buy rice and wheat to feed millions gets challenged at the WTO, the US’s subsidies that lower global prices don’t face any complaints.

Furthermore, the WTO measures subsidies based on prices from 1986 to 1988, a time when a kilo of rice in India cost around Rs 2-3. Today, that a kilo costs Rs 40 or more. But India’s subsidy cap is still calculated using the old Rs 2-3 price. So, even if the government gives farmers rice worth Rs 5 extra per kilo today, the WTO says India is "exceeding the 10% subsidy limit" because it’s more than 10% of 1980s prices. While the US had much higher agricultural prices in the 80s, so their 5% limit gives them more room to subsidise. So, it is a trade rule book written by the rich to preserve the interests of the rich.

The price Indian farmers pay for WTO’s biased rulebook

In India, 86% farmers own less than 2 hectares of land and therefore, for them, the government's MSP is safety net. It also helps to feed around 800 million people of India through a public distribution system. However, the WTO insists that India cannot provide more than 10% support – based on outdated reference prices. If India crosses this limit, countries like the USA file complaints saying this is unfair. 

However, farmers in the USA get much more money and sell their products at cheap prices in the global market. For Indian farmers, it is not just about trade rule but it is about their survival. 

Let’s take an example: a small farmer in Bihar grows rice on 1 hectare of land. Due to rising costs of fertiliser and seeds, he relies on the MSP but if the government lowers it to comply with WTO rules – and cheap imported rice floods the market – he won’t be able to compete. He will face a loss and could even stop farming. This has already happened in the 1990s, when India lowered import duties, cheap goods flooded the markets, and as a result, farmers suffered huge losses.

The WTO rulebook isn’t broken, it is working exactly as designed, in favour of powerful nations. Fixing WTO rules is not easy; all 164 member countries must agree. But rich nations like the USA and EU block reforms to preserve their advantage. 

The outdated 1986-88 price baseline still works in their favour and they cleverly hide their subsidies under the “Green Box” calling them harmless. To make things worse, WTO’s dispute system has been broken since 2019, thanks to the US refusing new judges. So, even if India has a strong case to make, there is no one to hear it.

This leads to the next question: why doesn't India simply shift its agricultural subsidies from the Amber Box to the Green Box? It is a logical question but the answer lies in the realities of Indian agriculture. 

Although Green Box subsidies are allowed under WTO rules, they do not directly benefit farmers. These are long-term supports such as research, infrastructure development and environmental conservation programs that may boost exports or improve systems over time. But for Indian farmers, especially the small and marginal holders, these subsidies don’t address the immediate crisis they face.

In India, land is highly fragmented, often split into tiny plots less than 2 hectares, which makes it difficult to adopt modern technology or benefit from large-scale infrastructure investment. With millions of poor farmers living season to season, what they need is direct income support, not contracts for conservation or promises of future gains. 

A Green Box subsidy might build a canal or fund a lab but it will not put cash in a farmer’s hand to buy seeds, fertiliser, or feed their family today. Moreover, Indian agriculture is not export-oriented like that of the US; it is consumption-driven and survival-oriented. It feeds 1.4 billion people and sustains rural livelihoods. That is why India prioritises immediate support like MSP procurement and fertiliser subsidies. These may fall under the Amber Box, but they are critical for survival, not trade distortion.

What alternatives do developing countries have?

Developing nations, especially those in the G33, must unite with underdeveloped countries to collectively push back against unfair WTO rules and renegotiate the rigid 10% cap on Amber Box subsidies. Together, these countries can demand reforms to the WTO’s structure and insist on greater policy space to support their agricultural sectors. At the heart of this movement must be a call to update the outdated 1986-88 base price reference every five years. Moreover, it’s time to reduce over-dependence on WTO mechanisms and strengthen regional and South-South trade alliances. Platforms like BRICS, BIMSTEC or even a new Global South Trade Forum could emerge as fairer alternatives. These institutions would represent the voices of emerging markets and provide a counterbalance to the dominance of the West.

Simultaneously, developing countries must use their growing consumer markets as leverage. Rich nations like the USA and EU depend on access to these markets for their exports. If developing nations negotiate collectively, they can force the issue of fairer trade rules. India must adopt a strategic protectionist policy to shield its farmers from cheap, subsidised imports. This doesn’t mean blanket import bans, it means using tools like tariff rate quotas, non-tariff barriers, and quality control standards to protect critical crops while staying within trade commitments.

On the domestic front, the government should take several steps. First, boost cash payments like PM-KISAN, which gives USD 80/year to farmers untied to crops, in what is called Decoupled Income Support (DIS). Raising this to USD 200/year could lift farmers from poverty without breaking the bank or WTO rules, unlike MSP’s costly USD 7-8 billion price tag. 

Farmers need training not only in modern farming techniques but also in digital literacy, market access and climate-friendly practices. Promoting crop diversification is also key, especially towards pulses, millets, and other nutritious crops that do not face heavy competition from subsidised Western crops. Support for organic farming should be increased with the help of NGOs so that farmers can access premium global markets. 

At present, India spends only USD 2.66 billion on Green Box subsidies, and this must rise sharply. More investment in rural infrastructure, cold storage, agricultural technology, and farmer cooperatives will reduce reliance on price support and help farmers become more independent and empowered in the long run.

On paper, the WTO’s 5% subsidy cap for the USA and 10% for India may seem fair. But in economic reality, it tells a different story, one where rich nations are protected and poor farmers are punished. The world must listen. Nations have a moral duty to act to rewrite the rules, to restore fairness and to protect the lives and futures of farmers in developing and underdeveloped countries. Because no one should have to die just to grow food.

Farmers are not asking for special treatment – they’re asking for a fair chance to grow food, educate their children and live with dignity. But when a farmer must choose between buying fertiliser or paying school fees and ends up losing both,  that is not trade justice, that's a tragedy.

Ganesh Ashok Pandit is an LL.B. student at the University of Delhi.

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