The government has raised the minimum export price for onions by $75 to $425 a tonne for October, the third straight month in a row, to discourage overseas shipments and tame domestic prices.
"The minimum export price (MEP) of onion has been increased by $75 to $425 a tonne for October to contain rising domestic prices," said a senior official with agri-cooperative Nafed, which is the government's nodal agency for regulating onion exports.
Last month, the onion MEP stood at $350 a tonne, while in October, 2009, it was $300 a tonne.
Depleting stocks of onion in cold storage chains is driving up prices, as fresh crops are only expected to arrive after November, the official said.
The wholesale prices at Lasalgaon, in Maharashtra, which is Asia's biggest onion market, have risen sharply by 60 per cent to Rs 1,600 per quintal today from Rs 1,000 per quintal in the same period last month, according to official data.
A similar increase was seen in retail prices across the country. For instance, in metros, onion prices have increased to Rs 19-24 a kg today from Rs 10-16 a kg a year ago.
"Higher export prices would help discourage overseas sales and increase domestic availability," the official said, adding that presently, demand for Indian onions is low as prices are higher by $50 a tonne in the global market as compared to Pakistan and China.
A higher MEP has slowed down the country's onion exports, which declined for the sixth consecutive month in September, according to Nafed.
Overall onion exports from India declined by 59 per cent to 57,855 tonnes in September from 1,41,299 tonnes in the same period last year, it said.
Agri-cooperative major Nafed, along with 13 other agencies involved in onion exports, regulates exports by fixing the MEP every month. No export can take place below the MEP and all contracts are registered with Nafed.
India's onion output was estimated at around 130 lakh tonnes in 2009-10.