Centre aims for onion prices to drop below Rs 40 per kilogram by January

Justifying the ban, Consumer Affairs Secretary also noted that other major onion-producing nations, such as Egypt and Turkey, have banned exports, putting pressure on the Indian crop

The Centre aims for onion prices to drop below Rs 40 per kilogram (kg) by January, down from the current average price of Rs 57.02 per kg. Simultaneously, it has increased intervention efforts to purchase the remaining 200,000 tonnes of onions from farmers to quell protests in Maharashtra following last week’s export ban announcement.

Protests, led by octogenarian former agriculture minister Sharad Pawar in Maharashtra, demanded an immediate reversal of the export ban. Farmers also staged roadblocks in several parts of Maharashtra.

Chief Minister Eknath Shinde assured that a solution would be worked out to prevent farmers from suffering. Of the additional 200,000 tonnes in the buffer, only around 3,200 tonnes have been purchased so far.

Meanwhile, justifying the ban, Consumer Affairs Secretary Rohit Kumar Singh told reporters in Delhi that the decision was made despite a slight moderation in prices due to the expected slight decrease in the forthcoming kharif onion harvest compared to last year, caused by delayed planting.

Singh also noted that other major onion-producing nations, such as Egypt and Turkey, have banned exports, putting pressure on the Indian crop.

“Due to the export ban by Egypt and Turkey, all global demand for onions has shifted towards India. Despite imposing a hefty duty and minimum export price (MEP), some exports continued, prompting us to impose a total ban,” Singh explained.

In November, around 120,000 tonnes of onions were exported from India, almost 29 per cent less than the same month last year but still on the higher side. From December 1-7, around 45,000 tonnes of onions were already exported.

Singh emphasised that the export ban would not affect farmers, stating that it is a small group of traders exploiting the price differential between India and Bangladesh markets.

“They (traders exploiting differential prices) will lose. But it is the Indian consumer who will gain,” he added.

To protect consumers, the Centre has already liquidated around 272,000 tonnes of onions from its buffer of nearly 510,000 tonnes.

“We still have around 50,000-100,000 tonnes of onions in the buffer to intervene because data shows that prices remain under control due to the government-held buffer. Traders then know they cannot manipulate the market,” Singh said.

To control domestic prices, the Centre initially imposed a 40 per cent export duty on onions on August 19 and concurrently decided to procure an additional 200,000 tonnes of onions from farmers. However, on October 29, it additionally notified an MEP of $800 per million tonne (free-on-board basis) as prices did not drop significantly.

The MEP was initially in place until December 31, but was extended to a total ban on exports until March 2024.

Exports were banned after the retail sale price of the kitchen staple crossed Rs 80 per kg in the national capital, while prices in mandis remained around Rs 60 per kg.

Onion inflation in the Consumer Price Index basket has been in double digits since July, reaching a near four-year high of 42.1 per cent in October.