Onion export ban lifted ahead of Nashik polls, relief amidst 40% duty concerns

In late April, the government allowed the export of 99,150 metric tons of onions to six neighboring nations, including Bangladesh, UAE, Bhutan, Bahrain, Mauritius, and Sri Lanka, as per the Ministry of Consumer Affairs.

The Indian government has lifted the ban on onion exports just days before the Nashik region, recognised as India's foremost onion-producing area, heads to the polls. In a notification issued by the Union Government, the export policy for onions has been revised from 'prohibited' to 'free,' contingent upon a minimum export price of $550 per Metric Ton (MT), effective immediately and until further directives.

This decision follows a notification issued on Friday by the government, which lifted the export ban, albeit with a 40% export duty in place. The move has been met with relief by Nashik traders, who perceive it as a significant alleviation.

The history of export regulations on onions in India dates back to August 2023, when the Union government imposed a 40% export duty until December 31, 2023, to stabilise domestic market prices. However, this decision sparked vehement opposition from traders and farmers in Nashik, resulting in protests and the temporary closure of crucial Agricultural Produce Market Committee (APMC) markets such as Lasalgaon and Pimpalgaon.

Despite the protests, the policy remained unchanged. Subsequently, in December 2023, a complete ban on onion exports was enforced until March 2024, causing significant distress among onion traders.

In late April, the government allowed the export of 99,150 metric tons of onions to six neighboring nations, including Bangladesh, UAE, Bhutan, Bahrain, Mauritius, and Sri Lanka, as per the Ministry of Consumer Affairs. Additionally, 2000 metric tons of white onions have been permitted for export to Middle Eastern and some European markets. These white onions incur higher production costs due to factors like seed expenses and stringent quality standards.

The decision to lift the export ban and authorize limited exports addresses concerns over lower crop yields and rising international demand. However, apprehensions persist among traders and farmers due to the imposition of the 40% export duty.