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The inter-ministerial meeting held on Monday has decided to do away with the minimum export price for onion for the time being.
According to officials close to the development, it is likely that there will be no MEP for export of onion and the export policy will be reviewed after watching the price situation for some time and arrival of the new harvest due in mid march. However final minutes of the meeting is yet to be worked out followed by the necessary notification.
While the ministry of agriculture had suggested for complete removal of the MEP to facilitate easy exports, department of consumer affairs have strongly opposed it stating that it will not only push up prices in the domestic market but it may lead to unfair trade practices.
According to consumer affairs, one of the reasons for the abnormal hike in onion prices some time back was uneven distribution in the domestic market. Reports from states suggested that there has been large scale hoarding to export rather than supplying in the domestic market as exports were profitable, said an official source.
Therefore, according to the ministry, onion MEP need to be abolished for free choice to the farmer as to trade its produce in domestic or export market as per the profitability.
In December 2013, the ministry of commerce reduced minimum export price (MEP) of onion to $150 a tonne from $350 for the third time in a year to boost exports and check sharp fall in domestic prices.
In December itself, the government had reduced the onion MEP to $800 a tonne from $1,150 a tonnes and just three days after that MEP was slashed to $350 a tonne.
The government had imposed MEP on onion in September 2013 and then it was raised several times to curb exports and boost domestic supplies as retail prices had shot up as high as Rs 100 per kg in major parts of the country. The country had to even import onion to control price rise.
MEP reduction has helped in checking exports, which as per reports, fell to 8.53 lakh tonnes (LT) during April-November period of this fiscal against 18.22 LT in the same period in 2012-13.
Currently, the wholesale onion prices in Maharashtra are between Rs 8 a kg to Rs 10 while the retail prices are in the range of Rs 20 a kg to Rs 25.
Bangladesh is one of the prime buyers of Indian onions. Although Pakistan, Iran and Egypt are competing with India, the exports have increased substantially after the reduction in the minimum export price (MEP) to $150 a tonne.
