India partially lifts ban on onion exports for bilateral purposes

INDIA – India has permitted onion exports to select nations on a government-to-government basis, according to informed sources.

This decision follows the Ministry of External Affairs’ recommendations and aims to address specific bilateral needs, although details about the exporting agency remain undisclosed.

The countries granted permission for limited quantities of onion exports include Bangladesh, Sri Lanka, Mauritius, Bahrain, Bhutan, and Nepal, among others.

According to Consumer affairs secretary Rohit Kumar Singh, the ban has not been entirely lifted and the status will continue till its March 31 deadline.

“Meanwhile, the ban will continue till its previously announced deadline of March 31^st as the government is keen to keep prices in check and ensure domestic availability,” Singh announced.

India, being the second-largest global exporter of onions, imposed a ban on onion shipments in December 2023 until March 2024, primarily due to escalating domestic prices and potential shortages. This ban had a ripple effect, causing a surge in onion prices in neighboring countries.

Efforts to curb exports started in August 2023 when the finance ministry introduced a 40% export duty, which proved ineffective due to under invoicing.

Subsequently, on October 28, the government implemented a minimum export price of USD 800 per ton on onions.

However, adverse weather conditions, including rain and hailstorms in Maharashtra’s Nashik and Ahmednagar regions, led to damaged crops in November, resulting in a peak-season decline in onion arrivals. Consequently, the government enforced a complete ban on onion exports on December 8.

The price of onions, which had soared to over INR40 (USD 0.48) per kg, has now plummeted to around Rs.13 in Nashik’s wholesale market, prompting protests from onion farmers who have been demanding the removal of the export ban for the past two months.

Onions bear significant weightage in overall inflation, contributing 0.6 percentage points, and hold a substantial 10 percentage points in the vegetable basket.

The recent price fluctuations have raised concerns about food inflation, a critical issue as the government approaches the Lok Sabha elections in a few months.

To address the crisis, a team of central government officials visited Maharashtra’s onion-growing regions in early February and was expected to provide recommendations to the government regarding the export ban.

Simultaneously, large exporters have proposed a balanced approach to the government, suggesting restricted exports instead of a complete ban to prevent a significant domestic price surge.

However, the challenges persist, and the onion supply shortage is expected to continue until the next kharif crop.

This impending scarcity raises concerns among industry representatives, who foresee potential trouble for consumers and markets alike.

A projected 30% decline in the rabi harvest, attributed to erratic monsoons in 2023, further intensifies worries, particularly with the approach of the Ramadan festival in early March.

In response to these concerns, leading onion exporters have urged the Union government to exercise caution in allowing exports without a robust mechanism to regulate volumes.

Reports have also surfaced indicating attempts to circumvent export restrictions through mislabeling shipments as alternative commodities, underscoring the need for vigilant oversight in these critical times.

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