India imposes 40% export duty on onions until December 31

The export duty on onions comes amid reports that onion prices are likely to rise in September

The government has imposed a 40 percent export duty on onions until the end of 2023. The move is the latest by the Centre to contain prices of key vegetables amid a massive rise due to supply-side issues.

Data released on August 14 showed India's headline retail inflation hit a 15-month high of 7.44 percent in July, spurred by a huge jump in tomato prices. Experts say prices of onions may rise similarly now, if not to the same extent.

Moneycontrol had earlier reported that onion prices in key markets across the country have risen sharply and even doubled in some places, including at Maharashtra’s Pimpalgaon and Lasalgoan Agriculture Market Committee, Asia’s largest onion market.

Experts had said that prices have surged due to speculative buying following decreased acreage of onions this monsoon as well as depleted carry-forward rabi stocks.

While prices of key vegetables such as tomato and onion have risen sharply, other food items like cereals, pulses, and milk are burning larger and larger holes in the pocket of households. However, the government has taken a series of steps to keep the price rise in check, including banning the export of non-basmati white rice, among others.

Earlier on August 18, the government had announced that it will release onion from its buffer stock in the targeted regions with immediate effect to ensure prices remain under check till the new crop arrives from October onwards.

The government is exploring multiple options for disposal of onion: e-auction, e-commerce as well as through states at discounted rates via retail outlets of their consumer cooperatives and corporations. It has currently maintained 3 lakh tonnes of onion under the Price Stabilisation Fund (PSF) to meet any exigencies, if rates go up significantly during the lean supply season.

As per the government data, onion prices have started inching up slightly as all-India retail price of the key kitchen staple was available at Rs 27.90 per kilogramme on August 10, higher by a little over Rs 2 per kg in the year-ago period. Rabi onion harvested during April-June accounts for 65 per cent of India's onion production and meets consumers' demand till the kharif crop is harvested in October-November.