The decision to lift the ban on onion exports was made based on the recommendations of the Department of Consumer Affairs, which monitors the availability and price situation of onions in the country. File | Photo source: PTI
The Center has received approval from the Election Commission of India to lift the ban on onion exports in view of the entry into force of the Model Code of Conduct in connection with the Lok Sabha elections, sources said.
The government has lifted the ban on onion exports, which could lend a hand boost farmers’ incomes ahead of the Lok Sabha polls in key producing regions, including Maharashtra.
The government imposed a minimum export price (MEP) of $550 per tonne (about £46 per kg) and a 40% export duty. Taking into account customs duties, shipments will not be allowed below $770 per tonne (about Rs 64 per kg).
The decision to lift the ban on onion exports was made based on the recommendations of the Department of Consumer Affairs, which monitors the availability and price situation of onions in the country.
According to government sources, the Revenue Department of the Ministry of Finance has obtained approval from the ECI to lift the ban on onion exports.
The decision assumes significance as it comes ahead of crucial Lok Sabha polls in key onion belts such as Nashik, Ahmednagar and Solapur in Maharashtra. Farmers in the region demanded that the ban be lifted to get a better price for their produce.
Impact on prices
On December 8 last year, the Center had banned onion exports in early December to control retail prices amid concerns over a likely decline in production. In the last 4-5 years, the country has been exporting 17 to 25 lakh tonnes of onion annually.
Consumer Affairs Secretary Nidhi Khare said on May 4 that lifting the ban would not lead to any price augment in retail markets. “Prices will remain stable. If there is any augment at all, it should be very marginal,” she said, while assuring that the government is committed to protecting the interests of both consumers and farmers.
The Directorate General of Foreign Trade (DGFT) in a notification dated May 4 said that “onion export policy is changed from prohibited to free subject to a quota of USD 550 per Member of Parliament per metric tonne with immediate effect and pending further orders “. On May 3, the Ministry of Finance imposed a 40% tax. export duty.
Explaining the rationale behind the decision, Ms Khare said “the ban on onion exports has been lifted from today (Saturday) as the supply situation is comfortable and prices are stable both in mandis and retail markets.” In April, the modal price at Lasalgaon mandi in Nashik was Rs 15 per kilogram.
She said the decision was taken after considering the latest estimate of onion production during the Rabi season at 191 lakh tonnes, which is a comfortable figure. When making this decision, the availability and prices of onions on world markets were also taken into account.
The secretary said the monthly domestic demand for onion is around 17 lakh tonnes. “Lifting the ban would also encourage farmers to plant more area under onions. The monsoon forecast is above normal,” she said.
She noted that the decision was made after extensive discussions with interested parties. The high-level team also visited key onion production areas in Maharashtra to assess the situation on the ground.
Ms. Khare also pointed out that the shelf life of onions is shorter and hence there was a need to export onions. She said the government is procuring 5 lakh tonnes of onion as buffer stock and may intervene in the market in case of price rise.
“We constantly monitor the prices of all necessary food products. We will continue to monitor the availability and pricing situation,” she said.
A senior government official explained that there is an inter-ministerial committee (IMC) that reviews prices, production, availability and exports of staple food items, including onions. “So this should not be considered an isolated incident of decision-making by the IMC,” the official said when asked if the decision was taken in the context of the general elections.
The official said the IMC has taken several steps in various commodities, including wheat and rice, to augment domestic supply and keep prices under control.
In March, the Union Ministry of Agriculture released data on onion production. According to the data, onion production in 2023-24 (first preliminary estimate) is expected to be around 254.73 lakh tonnes as against around 302.08 lakh tonnes last year. This is due to a decline in production of 34.31 lakh tonnes in Maharashtra, 9.95 lakh tonnes in Karnataka, 3.54 lakh tonnes in Andhra Pradesh and 3.12 lakh tonnes in Rajasthan, the data showed.
Last month, in an official statement, the Ministry of Consumer Affairs, Food and Public Distribution said the government had approved the export of 99,150 tonnes of onions to six neighboring countries: Bangladesh, United Arab Emirates, Bhutan, Bahrain, Mauritius and Sri Lanka.
Last month, the Congress accused the Narendra Modi government of “callously neglecting” onion growers in Maharashtra affected by the onion export ban. In its manifesto, the party promised a predictable import-export policy that would prevent such disastrous policies from being imposed on farmers at the last minute.
