Onion export ban to check price rise

New Delhi: In a move to check skyrocketing onion prices and give relief to consumers, the government on Sunday banned the export of onions with immediate effect, and imposed stock limits on traders to improve domestic availability.

The move comes days after prices of this basic kitchen staple snowballed across India. The retail prices of onion shot up to Rs 70-80 per kg in New Delhi and Mumbai in the wake of excess monsoon rains in key growing states.

Issuing a notification on Sunday, the Directorate-General of Foreign Trade (DGFT), which is under the commerce  ministry, prohibited the export of this commodity. “The reported export below minimum export price (MEP) to Bangladesh and Sri Lanka will be stopped immediately and strict action will be taken against violators,” it said.

However, last month, the Central government had also cautioned traders about strict action against hoarding of onions amid a supply disruption due to the floods in the growing states like Maharashtra and Karnataka.

“Also, retailers can stock onion only up to 100 quintals and wholesale traders are allowed to keep up to 500 quintals. Besides, state governments have been directed to take stringent steps to prevent hoarding,” the Centre’s notification added.

As far as onion exports are concerned, Bangladesh, Sri Lanka and the UAE are seen as the three top destinations for Indian onions. According the latest estimates, in the first four months of 2019-20, onion exports were $154.5 million.

Currently, retail onion prices are around Rs 70-80 per kg in Delhi and some other parts of India due to supply disruptions. “In view of the sustained high price of onion in the markets, the Central government took several steps to contain its prices, namely imposition of stock limit on traders, ban on exports, and state governments will take strict measures to prevent hoarding,” the consumer affairs ministry said.

However, the DGFT had on September 13 imposed a minimum export price (MEP) of $850 per tonne to curb shipments and help bring down rising domestic prices. The MEP is the rate below which no exports are allowed.

“Though there was some reduction in export of onions thereafter, yet exports were still continuing. The ban on the export of onions is expected to improve domestic availability and cool prices,” the notification said.

The government also imposed stock limits on onion traders to facilitate the release of stocks in the market and to prevent hoarding. “The stock limit of 100 quintals on retail traders and 500 quintals on wholesale traders was imposed across the country today,” the notification added.