Exporters and farmers have already asked the government to reduce the minimum exports price (MEP) further by $25 per tonne from the current MEP of $150 a tonne.
An empowered group of ministers (Egom) earlier this week did not consider abolishing MEP regime as had been demanded by exporters and farmers.
Farmers are worried that with the expectation of a bumper summer crop, which usually arrives by April, prices could dip further if sufficient quantity of the crop is not shipped out of the country.
According to a trader from Nasik, onion farmers are realising an average wholesale price of R300 per quintal on Friday which is barely able to meet their transportation cost. This dip in price has already forced many farmers in Maharashtra to resort to distress selling of the key agricultural commodity.
However, a Mumbai based exporter said that onion exports would rise when the markets of China and Singapore start functioning after the New year break.
In response to the demand from the exporters, the government last month has announced lowering of MEP to $150 per tonne from $250 per tonne prevailing earlier.
Lower of MEP by $ 25 a tonne would definitely give a boost to exports, an exporter told FE.
As per the latest data, India has exported more than 1.1 million tonne of onion worth of R1,498 crore during 2011-12 against 1.3 million tonne of exports worth R2159 crore reported in the
same period previous year.
Sri Lanka, Bangladesh, Russia, Europe, Mauritius, China, Singapore and Gulf countries are key exports destination for Indian onion.
The department of consumer affairs data says that retail price of onion in most of the key metros have declined to a range of R10 R13 per kg at present against R17 R18 per kg two months back
While the food ministry is in favour of abolition of MEP, commerce ministry want to avoid re-occurrence of huge jump
in onion prices in December 2010, which has forced the government to import onion from Pakistan for bringing down the domestic retail prices.
The government must get rid of MEP and canalising agencies for exports promotion, C B Holkar, board member, National Agricultural Cooperative Marketing Federation of India Limited (Nafed) said.
Onion production in the country is estimated to be more than 13 million tonne during 2011-12.
Maharashtra produces more than 40% of the total country onion production.