Global Economy

India allows export of onions to select nations

New Delhi: India has allowed exports of onions on government-to-government basis to some countries, on recommendation of the Ministry of External Affairs, said people aware of the matter.

One of the persons said a limited quantity of onion exports has been allowed for bilateral purposes though no decision has been taken on lifting a complete ban on onion exports. Details of the exporting agency could not be ascertained.

Another person said the government has permitted exports of onions in limited quantities to Bangladesh, Sri Lanka, Mauritius, Bahrain, Bhutan and Nepal, among others.

India, the world’s second largest onion exporter, had banned shipments of the kitchen staple in December 2023 till March 2024 due to rising domestic prices and potential shortages. This led to a surge in onion prices in neighbouring countries.

As onion prices started to rise in August 2023, the finance ministry imposed a 40% export duty to curtail shipments. However, it failed to have the desired effect due to under invoicing, prompting the government to impose a minimum export price of $800 per tonne on onions effective October 28.

With severe rain and hail storms damaging the crop in places such as Nashik and Ahmednagar in Maharashtra, onion arrivals fell in the peak season in November, inflating prices and forcing the government to ban shipments of the bulb vegetable effective December 8.This has led onion prices to crash from more than ₹40 a kg to about ₹13 currently in the wholesale market of Nashik, India’s main onion-growing region, prompting onion farmers to protest for two months demanding lifting of the export ban.Onions have 0.6 percentage points weightage in overall inflation and 10 percentage points in the vegetable basket. A rise in onion prices can push food inflation up causing concern for the government which is going to face voters in Lok Sabha elections in a few months.

In early February, a team of central government officials visited the onion growing regions of Maharashtra. The team was expected to make a recommendation to the government on the export ban.

Meanwhile, some large exporters wrote to the government on Sunday, suggesting that instead of completely banning onion exports, the government should permit outward shipments on a restricted basis, adding that any major export volume can lead to a significant price rise in the domestic market.

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