India lifts export ban on onion, puts $550/tonne minimum export price

The government has lifted export ban on onion and imposed a minimum export price (MEP) of $550/tonne, a day after it re-introduced 40 per cent export duty. Amid farmers’ discontent in Maharashtra, the decision to lift the ban has come 43 days after the government extended it for an indefinite period.

In a notification issued by the Directorate General of Foreign Trade (DGFT), it has been said that the onion export policy stands revised to “free” from “prohibited” with an MEP of $550/tonne.

The Rabi onion production is set to dip to 191 lt in 2023-24 (July-June) as against 236 lt year-ago, a fall of 19 per cent. Rabi onion is critical for the country’s onion availability as it contributes 72 -75 per cent of annual production. The Rabi crop is also crucial for ensuring year-round availability of onion as it has a better shelf life compared to Kharif onion and can be stored for supplies till November-December.

The Finance Ministry on May 3 had issued a notification levying 40 per cent export duty on onion with effect from May 4. After factoring the export duty, the minimum export price will rise to $770/tonne (around ₹64 per kg). India’s annual export of onion hovered between 17 lakh tonnes (lt) and 25 lt in last 4-5 years.

Briefing media to explain rationale of lifting the prohibition, Consumer Affairs Secretary Nidhi Khare said it would encourage farmers to plant more area under onion amid above normal monsoon forecast.

As per agriculture ministry data, onion production in 2023-24 (First Advance Estimates) is expected to be around 254.73 lakh tonnes compared to around 302.08 lakh tonnes last year, from all seasons. The government had attributed the fall to lower output Maharashtra, Karnataka, Andhra Pradesh and Rajasthan.

Though she exuded confidence that prices would remain stable, still she did not rule out an increase. “If at all there is any increase, it should be very marginal,” she said. The government is committed to protect the interests of both consumers and farmers, she added.

Khare also said the supply situation is comfortable and prices are stable in both mandies as well as retail markets. The modal price at Lasalgaon mandi in Nashik was ₹15 per kg in April.

On August 19 last year, the government slapped a 40 per cent export duty, which was brought down to zero on October 28, 2023, after it imposed an MEP of $800/tonne. However, as shipments of onion could not be curbed as desired amid an increase in domestic prices, the government had slapped a complete prohibition with effect from December 8, 2023, subject to quantities allowed on request of foreign countries on a case-to-case basis.

Since the export ban was to expire on March 31, the commerce ministry issued a notification on March 22 and extended the prohibition “until further orders”.

Last week, the government announced export permits worth 99,150 tonnes of onion to six countries -- Bangladesh, Bhutan, Sri Lanka, UAE, Bahrain and Mauritius, close after allowing 2,000 tonnes of white onion from Gujarat.

National Cooperative Exports Limited (NCEL) has been appointed the nodal agency for export of all prohibited agri produce including onion, sugar and rice.

In separate orders last month, the government allowed the export of up to 2,000 tonnes of white onion to the Middle East and some European countries via three specified ports on the west coast after being certified by the Gujarat government. It also had allowed 20,000 tonnes to the UAE and 10,000 tonnes to Sri Lanka. The total quantity of onion permitted for export, so far in the 2024-25 fiscal year exceeds 1.30 lakh tonnes (lt).

The Consumer Affairs Ministry, in a statement on April 27, said that NCEL has been sourcing the domestic onions to be exported through the e-platform at L1 prices and supplied to the agency or agencies nominated by the government of the destination country at the negotiated rate on a 100 per cent advance payment basis.

The ministry also said that the procurement target for the onion buffer out of the Rabi 2024 season under the Price Stabilisation Fund (PSF) of the Department of Consumer Affairs has been fixed at 5 lt this year. Central agencies such as NCCF and NAFED are tying up local agencies such as FPOs/FPCs/PACs to support the procurement, storage, and farmer registration to begin the procurement of any store-worthy onion, the government said.