INDIA – The Indian government has authorized the export of 99,150 metric tons of onions to six countries, including Bangladesh, the UAE, Bhutan, Bahrain, Mauritius, and Sri Lanka.
This move comes despite lower crop estimates and high international demand for Indian onions.
The National Cooperative Exports Limited (NCEL) will manage these exports, sourcing the onions through competitive e-platforms.
Additionally, the government approved the export of 2,000 metric tons of white onions to cater to markets in the Middle East and Europe.
The government aims to maintain domestic market stability by procuring 500,000 metric tons of onions under the Price Stabilization Fund for the Rabi-2024 season. This measure is intended to keep prices in check and ensure a steady supply within the country.
India had initially imposed an onion export ban in December, which was expected to be lifted as domestic prices fell due to the influx of new crops. However, the new directives in March 2024 to extend the ban indefinitely ahead of the general elections surprised traders and stakeholders.
“The extension is unexpected and unwarranted given the current situation with falling prices and ample new crop supplies,” said an executive at a Mumbai-based export firm, who wished to remain anonymous.
The decision to extend the ban, acording to the executive could have political ramifications as Prime Minister Narendra Modi seeks a third term in office in the upcoming elections. The move has added complexity to an already charged political landscape.
Since the extension, wholesale onion prices in Maharashtra, India’s largest onion-producing state, dropped significantly from 4,500 rupees to 1,200 rupees per 100 kg since December. The downturn disrupted market dynamics and created opportunities for rival exporters to increase their prices.
“India’s decision allows rival exporters to set higher prices because buyers have fewer options,” another executive from a Mumbai export company said.
The continuation of the export ban creates challenges for countries dependent on Indian onions and may affect global market stability.
However, the government’s recent authorization for exports to six countries and the Middle East shows its willingness to balance international demand with domestic needs.
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