To discourage exports and improve domestic supplies, the government on Saturday imposed a ‘high’ minimum export price (MEP) of $800 a tonne on onion.
The MEP for all varieties of onion except Bangalore Rose and Krishnapuram varieties cut and sliced or broken in powder form will be valid till December 31, the ministry of commerce and industry said in a notification.
The move follows the imposition of a 40% export duty on onions in August.
“The measure has been taken to maintain sufficient availability of onion to domestic consumers at affordable prices as the quantity of stored rabi 2023 onion is declining by curbing the quantity of onion exports,” according to a statement by the department of consumer affairs.
Officials told FE that the move is a virtual ban on onion exports as the MEP of $800/tonne, which translates into Rs 67/kg, is above the prevailing retail prices.
Sources said despite the imposition of 40% export duty on kitchen bulbs in August, shipments were not seeing any slowdown.
This 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.
India exported a record 2.5 MT of onion 2022-23, which is an increase of 65% from the previous fiscal.
Meanwhile, the government agencies—National Cooperative Consumers Federation of India (NCCF) and the farmers’ cooperative Nafed would procure an additional 0.2 MT onion for the buffer stock in addition to 0.5 MT already purchased from the farmers.
Retail prices of onion in the national capital regions have increased by 50% to Rs 60/kg from Rs 40/kg a fortnight ago due to delayed arrivals of kharif harvest in key producing states of Maharashtra and Madhya Pradesh.
Several other urban centres are also reporting hike in prices.
The modal retail prices of onion rose by 25% to Rs 50/kg on Saturday in the last two weeks. In the beginning of the month, modal retail prices of onion was Rs 20/kg.
The benchmark prices at Lasalgaon, Maharashtra, the hub of the country’s onion trade rose to Rs 4,663/quintal on Saturday from Rs 2,350/quintal two weeks ago. Traders said supplies during the next few weeks are likely to be tight because demand will rise further following a temporary decline due to Navratri.
Traders say that prices are expected to rise further in the coming weeks as there are reports of lesser harvest of kharif crops in Maharashtra because of deficient monsoon rainfall in the key growing districts.
Several other urban centres are also reporting hikes in prices.
The onion retail inflation rose by 35.82% in September because of supply constraints due to output hit by unseasonal rains early this year in Maharashtra and Karnataka.
NCCF and Nafed are currently selling onion from the buffer stock at a highly subsidised rate of Rs 25/kg to consumers in various towns so far 0.17 MT has been disposed of from the buffer.
The estimated production of onion during the 2022-23 crop year (July-June) is around 31.8 MT against 31.7 MT reported in the previous year. The output of kitchen bulbs was 26.64 MT in 2020-21.