Amid a sharp decline in onion prices due to bumper production and disruptions in exports to Gulf countries caused by the West Asia conflict, government agencies on Friday began procuring onions from farmers under the Price Stabilisation Fund (PSF).
“Due to increased production and export-related challenges, market prices have been affected. Starting today, NAFED will begin purchasing onions at Rs 12.35 per kg to provide immediate support to farmers,” Agriculture Minister Shivraj Singh Chouhan said at an event in Maharashtra.
Farmers’ cooperative NAFED and National Cooperative Consumers’ Federation of India have each set a procurement target of 0.1 million tonne (MT) of onions for the current fiscal year. These agencies had procured 0.3 MT and 0.47 MT of key vegetables in FY26 and FY25, respectively.
Onions procured under the PSF are typically released into the market in a calibrated manner when retail prices begin to rise, usually around October.
Lasalgaon Wholesale Prices Tumble
Sources said the agencies are in the process of finalising local procurement partners, while the Central Warehousing Corporation has identified around 20 onion storage warehouses. Wholesale onion prices in Lasalgaon — the country’s largest onion trading hub — fell to around Rs 1,100 per quintal on Friday, compared with Rs 2,000 per quintal a year ago.
Traders said prices are likely to remain subdued in the coming months due to the arrival of the new rabi crop for the 2025–26 season.“Current onion prices are only covering farmers’ production costs. Exports have also been affected by the West Asia conflict, which has further pressured prices,” said Jaydutt Holkar, director of the Agricultural Produce Market Committee (APMC), Lasalgaon, Nashik.
He added that the government should provide export incentives to boost onion shipments.According to the Department of Consumer Affairs, the modal retail price of onions fell to Rs 25 per kg on Thursday, down more than 6% from a year earlier.
Retail onion inflation declined 17.67% year-on-year in April 2026. Onion inflation has remained in negative territory since May 2025.
Record Rabi Yields
According to estimates by the agriculture ministry, onion production in the 2024–25 crop year (July–June) is projected at 30.76 MT, up 27% from the previous year.
Output in the 2025–26 crop year is expected to rise further. India exported 1.5 MT of onions in 2025–26, with Bangladesh, Malaysia, United Arab Emirates, Sri Lanka, and Nepal serving as the major destinations. In FY25, onion exports stood at 1.14 MT. The rabi onion harvest, which accounts for 70–75% of India’s total onion production, plays a critical role in meeting domestic demand and maintaining price stability until kharif crop arrivals begin in October.