India has approved limited exports of onions on a government-to-government basis to countries including Bangladesh, Sri Lanka, Mauritius, Bahrain, Bhutan, and Nepal. This decision comes despite the ongoing ban on onion exports, which was implemented in December 2023 and is set to last until March 2024. The ban was a response to rising domestic prices and potential shortages.
The surge in domestic onion prices began in August 2023, leading the finance ministry to impose a 40% export duty. However, this measure was not effective due to under-invoicing, prompting the government to set a minimum export price of $800 per tonne on October 28. Severe rain and hailstorms, particularly in Nashik and Ahmednagar in Maharashtra, further impacted the onion crop, reducing arrivals during the peak season in November and inflating prices.
As a result of the export ban, onion prices in Nashik, India's main onion-growing region, dropped from over ₹40 per kg to approximately ₹13 in the wholesale market. This price drop led to protests by onion farmers demanding the lifting of the export ban. Onions hold a 0.6 percentage point weightage in overall inflation and 10 percentage points in the vegetable basket. A rise in onion prices can significantly impact food inflation.
In early February, a team of central government officials visited Maharashtra's onion-growing regions to assess the situation and potentially recommend actions regarding the export ban. Some large exporters have suggested to the government that instead of a complete ban, restricted outward shipments of onions should be allowed to prevent significant price rises in the domestic market.
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