India removes ban on onion export

India was lifted the ban on onion exports after about half a year, according to a notification from the Directorate General of Foreign Trade. The move is expected to be a shot in the arm for traders in Maharashtra that accounts for a significant share of onion crops and it comes before the next phases of Lok Sabha elections where several areas of the western state are set to go to polls.

While the prohibition for onion export has now been removed, DGFT has set the Minimum Export Price (MEP) for onion at $550 per tonne.

This is effectve immediately.

Onion traders and farmers, especially from Maharashtra, have been urging for the ban to be lifted, saying that it would assist farmers in obtaining better prices. However, the government had remained hesitant, fearing that the export of this crucial kitchen staple could lead to a surge in domestic prices.

Last month, the Congress criticised the Narendra Modi government for neglecting Maharashtra’s onion farmers affected by the export ban on onions. They mentioned that their manifesto pledges a predicatble import-export policy to avoid sudden and harmful policies being enforced on farmers.

Onions have always been a critical part of India’s political economy, especially when election times come around. Indira Gandhi herself described the central elections of 1980 as the “onion election”, a contest she won, defeating the first non-Congress government of independent India. Within a year though, the prices had shot up to six rupees, a princely sum for that era.

In December last year, the government prohibited the export of onions till March 31, 2024 but allowed their shipments based on permission granted by the central government to other countries on the request of other countries. Last month, India had extended the export ban on onion till further orders.

To check the soaring price of onion, the government had imposed a minimum export price of $800 per tonne on October 28 till December 31, 2023. In August last year, India imposed a 40% duty on the export of onions to improve supplies of the staple vegetable in the domestic market until December 31, 2023.

On May 3, the government had again imposed a 40 per cent duty on export of onions. Additionally, it granted an exemption on duty for the import of desi chana until March 31, 2025.

Onion production for the year 2023-24 (as per the First Advance Estimates) is predicted to be about 254.73 lakh tonnes, down from about 302.08 lakh tonnes the previous year. This decline is mainly because Maharashtra is expected to produce 34.31 lakh tonnes less, Karnataka 9.95 lakh tonnes less, Andhra Pradesh 3.54 lakh tonnes less, and Rajasthan 3.12 lakh tonnes less, as shown by the data.

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