GENEVA – India welcomed on Wednesday an offer by the United States to limit its farm subsidies as part of efforts to save a global trade deal.

'The first thing which we must take note of and must appreciate is that the United States is moving,' Indian Commerce Minister Kamal Nath told reporters at last-ditch World Trade Organisation talks in Geneva over the Doha trade round.

Nath's optimistic tone contrasted with his reaction earlier on Wednesday to the U.S. offer which he called 'wholly inadequate'. Washington had to give more but the move showed the deadlock had been broken, he said.

'Up to now there was no movement. The fact that movement has started is a good thing,' said Nath who arrived three days into the trade talks after attending a government confidence vote.

Nath hoped the talks could set out a basis for a final deal on the 7-year-old trade talks which aim to open markets for farm, manufactured goods and services around the world.

A WTO official said earlier slow progress meant the talks might drag beyond Saturday's scheduled end date.

Under Doha, developing nations are supposed to benefit from a scaling back of huge barriers that protect farmers in the United States and Europe, but the biggest emerging economies like India and China are being asked to open their markets too.

Without a breakthrough on farm and industrial goods by the August summer break, the round risks being put on hold possibly for a couple of years due to November's U.S. presidential election, the 2009 White House changeover and other factors.

REAL CUTS

The United States on Tuesday offered to cap trade-distorting farm subsidies at $15 billion, lower than the level in seven of the last 10 years and the existing $48.2 billion ceiling.

But the proposed limit is above the approximately $7 billion paid to U.S. farmers last year, an amount that was relatively small due to high commodity prices.

Developing countries complain that rich country subsidies squeeze their farmers out of the market, reducing local food production and leaving them vulnerable to food price spikes.

U.S officials said they were disappointed that Nath did not respond to their subsidy offer by indicating new willingness to cut tariffs on manufactured goods which they argue would also help other developing countries access India's vast market.

'We hope Nath is just reading from old talking points. If the emerging markets don't contribute it will not truly be a development round,' said U.S. spokeswoman Gretchen Hamel.

Kent Conrad, a Democratic senator from grain-producing North Dakota, expressed dismay that farm subsidies would be capped.

He said in a statement that U.S. trade chief Susan Schwab seemed 'to be negotiating against herself. She's certainly not negotiating in the interests of hard-working family farmers in North Dakota and elsewhere in the country'.

Negotiators from WTO countries were meeting in small groups on Wednesday in a bid to dig deeper into the issues that stand in the way of a deal.

(additional reporting by Jonathan Lynn, Laura MacInnis and William Schomberg)

(Editing by Janet Lawrence)