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The government might re-impose minimum export price (MEP) at about $300 (Rs 18,039) a tonne on onions if prices continue to show a rising trend.
This step, if taken, would be a significant move by the National Democratic Alliance government, which accords top priority to combating food inflation.
A section of the government is of the view that an MEP of $300-a-tonne can be re-imposed on onions, which would stop exports of low-quality onions to neighbouring Bangladesh and Pakistan but would not hurt other traders much as deals are being struck at the same price, an official said.
The issue of onion prices was discussed at an internal meeting of officials in the agriculture ministry on Monday, after which Union agriculture minister Radha Mohan Singh was briefed on the same.
The consideration came amid reports of a flash strike by a section of labourers in Nasik - one of India's biggest centres of onion - pressing for a wage hike.
"We have received reports that a section of labourers have gone on a strike in Nasik, but the situation is not alarming yet," R P Gupta, director of Nasik-based National Horticulture Research and Development Foundation, told Business Standard.
He said the government is keenly watching the situation.
MEP on onions was abolished in March this year after prices crashed in the domestic markets, following which exports were also made free.
Onion prices have been showing a rising trend in some parts of the country since May, which prompted the new government to get into action.
Data sourced from Department of Consumer Affairs show that in some cities such as Chandigarh, onion prices in the retail markets have moved up by Rs 6 a kg since May 1, while in Raipur it has become costlier by Rs 5 during the same period.
In Visakhapatnam, onion prices in the retail markets have become costlier by Rs 10 a kg since May 1, 2014. Last week, a senior official with the Department of Consumer Affairs had said that the government would take a call on re-imposing the MEP on onion within 10 days.
He had said prices were following a normal trend seen in the past few years.
