India and China have formulated a proposal asking rich nations to eliminate their farm subsidies that exceed the ceiling amount, reported Business Line.

The two countries, in a joint proposal to the WTO, submitted recently, have asked for the reduction process to begin as early as 2019 for removing the asymmetry in the WTO’s agreement on agriculture and eliminating distortions in world trade.

"Any meaningful attempt at reforms in agriculture subsidies must address the asymmetry between the developed members on the one hand and most of the developing members on the other hand in their respective entitlements to AMS (Aggregate Measurement of Support) beyond de minimis and the flexibility to provide high product-specific support," the proposal said.

The move comes after the World Trade Organization (WTO) members including the US and European Union questioned India’s Minimum Support Price (MSP) programme for farm produce.

Negotiations on further discipline on domestic support for agriculture should start only after reduction of trade-distorting subsidies by developed nations, the proposal added.

Washington has alleged that India is under-reporting its subsidies, however, which New Delhi has refuted.

The proposal is a follow-up of the first proposal submitted last year by the two nations. In the previous proposal, they had pointed out that rich nations have been consistently giving trade-distorting subsidies (aggregate measurement of support), which exceeded the ceiling levels applied on developing countries, to their farmers.

The countries alleged the developed world cornered 90 percent of total entitlements, amounting to a whopping $160 billion, annually.

In the first proposal, India and China revealed that WTO rules provided flexibilities to a handful of countries, allowing them to increase subsidies beyond the permissible limit. As a result, subsidies for many items given by the developed world rose to 50 to 100 percent of the production value. Meanwhile, the developing countries were forced to contain it within the 10 percent ceiling or face penalties.

A reduction in the subsidies provided by these nations is deemed as the first step in the reform process for establishing a fair and market-oriented agricultural trading system, the proposal said.