Policy Change Amidst Market Dynamics

India has lifted the export ban on onions, setting a minimum export price of $550 per ton. This significant policy change comes a day after reintroducing a hefty 40% export duty. Reacting to dissatisfaction among Maharashtra's farmers, the government revoked the ban after 43 days. The Directorate General of Foreign Trade announced that the onion export policy now classifies as "free" from "prohibited."

Impact on Rabi Onion Production

Projected Rabi onion production is set to decrease by 18% this season, totaling 19.3 million tonnes. Rabi onions, contributing 72-75% of the annual production, are essential for year-round availability due to their longer shelf life. Initially, on May 3, the Finance Ministry imposed a 40% export duty, effective from May 4.

Previous Adjustments and Current Measures

Previously, the government had set a 40% duty last August, then removed it in October 2023 after setting an $800 MEP. Despite these controls, continued exports amid domestic price rises led to a full export ban on December 8, 2023. This ban was extended indefinitely on March 22, as it was initially set to expire at the end of March.

Recent Export Permits and Future Plans

Recently, export permits for 99,150 tonnes of onions were issued to six countries, including Bangladesh and the UAE. The National Cooperative Exports Limited (NCEL) has been designated as the nodal agency for exporting restricted agricultural products such as onions. Last month, the government also permitted the export of up to 2,000 tonnes of white onions to select European and Middle Eastern countries.

Domestic Sourcing and Export Procedures

Furthermore, the Consumer Affairs Ministry on April 27 reported that onions are being sourced domestically for export at L1 prices. These onions are then sold to appointed agencies at negotiated rates, with full advance payments required. This year, the Price Stabilization Fund's onion buffer target is set at 0.5 million tonnes, with procurement starting soon. Central agencies are collaborating with local entities to support the storage, procurement, and farmer registration processes.