Govt plans to lift onion MEP for 2 months to boost exports

Written by Sandip Das | New Delhi | Updated: May 2 2012, 02:49am hrs
With onion prices stabilising, thanks to a bumper rabi crop, the government plans to lift the minimum export price (MEP) regime for the next two months for boosting exports.

Sources in the commerce ministry told FE that onion MEP would be temporarily suspended for two months or more and would be again reimposed after monitoring the exports of the commodity.

We are cautious in lifting MEP regime and we want to maintain sufficient supplies in the domestic market, a key commerce ministry official said. After pressure from exporters and farmers, the government in February had slashed the MEP of all varieties of onions, excluding Bangalore Rose onions and Krishnapuram, by $25 per tonne to $125 per tonne (freight on board) to encourage exports.

The commerce ministry official said, Onion MEP is already low and the countrys consignment should get better price than MEP in the global market.

India exports onion to Sri Lanka, Bangladesh, Russia, Europe, Mauritius, China, Singapore and Gulf countries. India, the second-largest onion producer in the world, had shipped 1.5 million tonne during 2011-12. The production during 2011-12 (July-June) is estimated at 15.13 million tonne.

The realisation from onion exports during the last fiscal was R1,714 crore. During 2010-11, India exported onion worth R2,159 crore.

Traders from Nasik, the hub of the country's onion trade, said prices are not expected to jump significantly because of a bumper rabi crop, which would sustain supplies during summer months. Farmers are still bringing in produce, and this is expected to continue till end of May, a trader from Nasik said.

Meanwhile, wholesale price of onion at Nasik is ruling at around R400-450 per quintal. The retail price in Delhi has jumped to R14 per kg from R13 per kg two months back. In all other cities also, the prices have increased marginally during the past two months.

Nasik-based National Horticulture Research and Development Foundation (NHDRF) in its latest report had said: The rabi onion production is expected to be more. Therefore, quantity of onion that will be stored is likely to be more against last year.

The report also indicated that prices are expected to rise marginally because farmers and traders are expected to store the produce during April and May.