India has greenlit the export of onions on a government-to-government basis to certain countries, following recommendations from the Ministry of External Affairs. According to an ET report.
A restricted amount of onion exports has been sanctioned for bilateral purposes. However, no decision has been reached regarding the complete lifting of the onion export ban. The identity of the exporting agency remains unknown. ET reported citing its sources.
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Permitted Countries
The government has reportedly allowed the export of onions in limited quantities to countries including Bangladesh, Sri Lanka, Mauritius, Bahrain, Bhutan, and Nepal.
Onion Export Ban
India, the world’s second-largest onion exporter, prohibited the export of this kitchen essential from December 2023 to March 2024 due to escalating domestic prices and potential shortages. This ban led to a spike in onion prices in neighbouring countries.
In August 2023, as onion prices began to climb, the finance ministry imposed a 40 per cent export duty to curtail shipments. However, this measure did not yield the desired effect due to under-invoicing, leading the government to set a minimum export price of $800 per tonne on onions from October 28.
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Onion Price Inflation
Severe rain and hail storms damaged the crop in areas such as Nashik and Ahmednagar in Maharashtra, causing a drop in onion arrivals during the peak season in November. This resulted in price inflation and led the government to ban onion shipments from December 8.
The ban caused onion prices to plummet from over Rs 40 per kg to approximately Rs 13 in Nashik’s wholesale market, India’s primary onion-growing region. This price crash led onion farmers to protest for two months, demanding the lifting of the export ban.
Onions account for 0.6 percentage points of overall inflation and 10 percentage points in the vegetable basket. An increase in onion prices can drive up food inflation, causing concern for the government, which is preparing for the upcoming Lok Sabha elections.
Government Review
In early February, a team of central government officials visited Maharashtra’s onion-growing regions. The team is expected to make a recommendation to the government regarding the export ban.
Reportedly, some large exporters wrote to the government on Sunday, proposing that instead of completely banning onion exports, the government should allow outward shipments on a restricted basis. They warned that any significant export volume could lead to a substantial price increase in the domestic market.ET reported.
