Onion export ban extended in bid to increase domestic availability, keep prices under check

The government has extended the export ban on onion till further orders to increase domestic availability and keep its prices under check.

The wholesale prices of onion have spiked by about 43 per cent to Rs 2,549 per quintal (100 kg) from the year-ago levels.

“Prohibition on export of onions valid till March 31 is extended until further orders,” the Directorate General of Foreign Trade (DGFT) has said in a notification dated March 22.

DGFT is an arm of the ministry which deals with exports and imports-related issues.

On December 8, 2023, the government banned export of onions.

The output of the kitchen staple in the 2023-24 crop year may fall 15.6 per cent to 25.4 million tonnes (mt) as key growing regions received weak rains, the agriculture ministry has said.

Onion, which is considered the poor man’s vegetable, not only adds flavour to many dishes but has brought down governments in the past. The high prices have the potential to wreck political fortunes during the 2024 general elections.

Production is expected to be lower by 3.4 mt in Maharashtra, 995,000 tonnes in Karnataka, 354,000 tonnes in Andhra Pradesh and 312,000 tonnes in Rajasthan, the main producing states.

Analysts said the lower output could further spike the prices and add to the inflationary pressure in the economy.

According to the department of consumer affairs, the all India average onion price wholesale data shows that the bulb crop was selling at Rs 2,549 per quintal compared with the year-ago price of Rs 1,777 per quintal.

“Vegetable inflation is the highest at 30.3 per cent and with onion prices going up again, will continue to exhibit such tendencies,” Madan Sabnavis, chief economist, Bank of Baroda, said, adding that the horticulture output this year is expected to be lower than last year.

The export of onions to friendly countries is allowed on a case-to-case basis after approval from the inter-ministerial group.

The government has permitted exports of 64,400 tonnes of onion to the UAE and Bangladesh through the National Cooperative Exports Ltd (NCEL).

Earlier, in October 2023, the Centre had decided to step up the sale of buffer onion stock at a subsidised rate of Rs 25 per kg in retail markets in order to provide relief to consumers.