Govt Imposes 40% Export Duty On Onion To Boost Domestic Supply Amid Rising Prices

The government on Saturday levied a 40% duty on the export of onions to boost domestic availability as there is surge in the prices. This is the first time ever an export duty on onion has been imposed as retail prices of the kitchen staple hit Rs 37 per kg on Saturday in Delhi, as per government data.

The Finance Ministry through a Customs notification imposed a 40% export duty on onions till December 31, 2023.

Earlier this year between April 1 and August 4, 9.75 lakh tonne of onions have been exported from the country. The top three importing countries in value terms are Bangladesh, Malaysia and the UAE, according to a PTI report.

Consumer Affairs Secretary Rohit Kumar Singh said in order to increase the availability of onions in the domestic market especially in view of the upcoming festival season, the government has decided to impose a 40 per cent duty on the export of onions.

"It was also being noticed that there was a sharp rise in exports in the recent past," Singh said.

The government had always used a minimum export price tool to curb onion exports. However, for the first time this year, export duty has been slapped for effective control of the outward shipment, added the PTI report.

According to consumer affairs ministry's data, the all-India average retail price of onion was ruling at Rs 30.72 per kg on Saturday, with a maximum price at Rs 63 per kg and a minimum at Rs 10 per kg.

In Delhi, onion was ruling at Rs 37 per kg on Saturday, according to the data. The trade data highlighted onion prices ruling at Rs 50 per kg in the national capital.

Onion prices began soaring amid reports of lag in onion coverage in the current kharif season.

According to the wholesale price index (WPI) data for July, onion inflation rose to 7.13%, against (-)4.31% in June.

The annual retail or consumer price inflation has touched a 15-month high of 7.44 per cent in July, against 4.87 per cent in June, amid a sharp spike in food prices, added the PTI report.

The government has maintained 3 lakh tonnes of buffer onion this year. It has started disposing of it in the wholesale market since last week in key locations.

So far, 2,000 tonnes of buffer onion has been sold in wholesale mandis of Delhi, Assam, Himachal Pradesh, Telangana and Andhra Pradesh, the Secretary said.

The buffer onion is usually used for market intervention during the lean period between August and September till the arrival of the fresh crop from October onwards, stated the PTI report.

Onion is a politically-sensitive commodity. The restriction comes ahead of assembly elections in key states like Madhya Pradesh, Chhattisgarh, and Telangana due at year-end.