India and Brazil have agreed to settle a dispute over India's sugar subsidies to farmers through bilateral consultations, sources told on Saturday.
"On the issue of support given by India to sugarcane growers, a matter on which Brazil has filed a WTO dispute, it was agreed to address the issue through bilateral consultations," sources said.
"PM Narendra Modi took up the matter with Brazil President Jair Bolsonaro during the talks. As a gesture of our close friendship and given the importance India attaches to the matter, both sides agreed to address the issue through bilateral consultations," sources added.
Brazil is the largest producer and exporter of sugar in the world and is a major competitor of India in the international sugar market.
In February 2019, Brazil had dragged India into the World Trade Orgsation's (WTO) dispute settlement mechsm alleging that New Delhi's sugar subsidies to farmers are inconsistent with global trade rules.
Brazil claimed that the domestic support measures extended by India appeared to be inconsistent with the Articles 3.2, 6.3 and 7.2 (b) of the Agreement on Agriculture.
Brazil was later joined in the process by several other countries including Australia and Guatemala.
The South American country further alleged that in recent years, India has massively increased the level of domestic support under its support regime for sugarcane and sugar.
The countries had filed the dispute settlement under certain articles of WTO's Agreement on Agriculture, Agreement on Subsidies and Countervailing Measures and the General Agreement on Tariffs and Trade 1994. If the panel rules against India's sugar subsidies, India can approach the appellate body of the WTO's dispute settlement mechsm.
Meanwhile, Prime Minister and Brazilian President Bolsonaro focused on expanding cooperation in the defence sector as well as energy, healthcare, technology, and agriculture.
"Today's meeting with President @jairbolsonaro is our third in the last eight months. This reflects the topmost priority we accord to further expanding India-Brazil ties. It is gladdening that President Bolsonaro has graced our Republic Day celebrations as the Chief Guest," the prime minister said in a tweet.
The Brazilian president is in town as a chief guest during India's 71st Republic Day celebration.
( With inputs from ANI )