India lifts onion export ban but raises price to $550 per tonne

After about six months, India on Saturday (4 May 2024) lifted the ban on onion exports but imposed a minimum export price (MEP) of USD 550 per tonne.

"The export policy of onions is amended from prohibited to free subject to MEP of USD 550 per tonne with immediate effect and until further orders," the Directorate General of Foreign Trade (DGFT) said in a notification.

A principal political reason for removing the ban at this juncture is polling in ongoing Lok Sabha polls in onion-growing areas of Maharashtra which is electorally crucial because it has the second highest number of seats -49 after Uttar Pradesh (80).
Onion traders and farmers, especially from Maharashtra, have been demanding lifting of the ban, which was imposed in December last year contending 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 main opposition party Congress had criticized the government of Prime Minister Narendra Modi for "neglecting" Maharashtras onion farmers affected by export ban on onions. They mentioned that their manifesto pledges a predictable import-export policy to avoid sudden and harmful policies being enforced on farmers.

In December last year, India clamped the ban on export of onions till March 31, this year to check soaring prices in domestic markets. But it 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.

India had also imposed a minimum export price of $800 per tonne on October 28 till December 31, 2023. In August last year, India imposed a 40 percent 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 Indian government had again to impose a 40 percent duty on export of onions.

Indias onion production for 2023-24 (as per the official data of the First Advance Estimates) is projected at about 254.73 lakh tonnes, down from about 302.08 lakh tonnes the previous year. This decline is mainly attributed to decline in production in key onion-growing states like Maharashtra, Karnataka, Andhra Pradesh and Rajasthan.