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Wary of steep rise in onion prices that could further push up food inflation, government may ban export of the commodity to improve domestic supply and keep rates under check.
"We are keeping a close watch on onion prices. We are thinking (of) various options including ban on onion export to control prices," a senior government official said.
Both wholesale and retail prices of onion, a politically sensitive commodity, have risen sharply in the past few weeks in most markets due to supply constraints following heavy rains in producer states like Maharashtra.
The retail price of onion has touched Rs 30-40 per kg in Delhi, while the wholesale price has increased to Rs 25 per kg at Lasalgoan in Maharashtra, Asia's biggest onion market.
According to official data, India has exported 5,11,616 tonnes of onion amounting Rs 776.47 crore in first quarter of the fiscal against 5,17,274 tonnes in year-ago period.
Experts said there is a possibility of ban on onion exports as the government is left with no option to control shipments at present. Earlier, it used to tweak the minimum export price (MEP) of onion in the event of price rise. But the MEP has been scrapped since last year.
They, however, said it would be a tough call for the government to ban shipments at a time when it is pushing for exports to reduce current account deficit.
India exports 10% of its total onion output. Much of it is shipped to Bangladesh, Malaysia and Singapore.
Fresh supply of northern variety of onion has been exhausted and demand is being met through old stocks.
"Onion prices are expected to be under pressure till next month because new crop from Maharashtra, Andhra Pradesh Karnataka and Rajasthan is expected to hit market from October onwards," an official from Nasik-based National Horticultural Research and Development Foundation (NHRDF) said.
Although production is expected to be normal at around 15-16 million tonnes this year, lower crop in states like Tamil Nadu has put pressure on Maharasthra.
