The government has indefinitely extended the ban on onion exports imposed last year, which is likely to bring down domestic prices of the key vegetable. “The export prohibition on onions valid till March 31 has been extended until further orders,” said a Directorate General of Foreign Trade notification.
In December 2023, the government had banned exports of onion after the modal retail prices of the key agricultural commodities doubled to Rs 60/kg from Rs 30/kg reported in September last year. The export of onions to countries is allowed on a case-to-case basis after approval from the inter-ministerial group.
Sources said despite the arrival of rabi crop harvest, prices have not softened yet. According to the department of consumer affairs, the modal wholesale prices of onion on Friday were Rs 2,500/ quintal against Rs 1,500/ quintal a year ago. Correspondingly, the modal retail prices are currently ruling at Rs 30/kg against Rs 20/kg reported a year ago.
Officials said that prospects of a lower rabi output, which has a share of 60% in onion output, is the reason why the government did not want to open up exports of the key vegetable.
Retail inflation onion was 22.1% in February, while prices rose by 29.69% in January 2024 on year. However, the farmers groups have demanded lifting the ban on onion exports imposed as supplies have risen in the market.
“Since the imposition of exports ban last year, the mandi prices declined to Rs 1,200/quintal at present from around Rs 4,500/quintal prior to the imposition of shipment ban last year,” Jaydutt Holkar, director, agricultural produce market committee (APMC), Lasalgaon, Nashik, Maharashtra, the hub of the country’s wholesale trade told FE.
Holkar said that prices are expected to fall further with arrivals of rabi crops set to peak in the next few weeks. “Current prices of around Rs 1,200 a quintal do not even cover the cost of the production of onion,” Balasaheb Misal, former director, Manmard (Maharashtra) mandi board and an onion farmer, said.
Several countries, including Bangladesh, Malaysia, Nepal and the United Arab Emirates, rely on imports from India to meet their domestic supplies and prices in these countries have been higher since the ban was imposed. Recently, the government had allowed 50,000 tonne and 14,400 tonne of onion exports to Bangladesh and the United Arab Emirates, respectively.
The export ban was the first intervention in onion exports since January 2021. The government has not imposed a ban on onion exports since 2021, which was the norm a few years ago.
In the current fiscal, India has exported around 1.6 million tonne (MT) of onion. India exported a record 2.5 MT of onion 2022-23, an increase of 65% from the previous fiscal.
In October 2023, to discourage exports and improve domestic supplies, the government had imposed a minimum export price (MEP) of onion at $800/tonne, which translates into Rs 67/kg. Earlier, the government had imposed a 40% export duty on onions in August last year.
Recently, the agriculture ministry has estimated that onion production is likely to fall by 16% to 25.47 MT in the current crop year compared to 2022-23 due to a decrease of 3.43 MT in Maharashtra, the biggest producer of the staple vegetable.