India Eliminates Minimum Export Prices for Onion and Basmati Rice

The government has decided to eliminate the minimum price thresholds for onion and basmati rice to enhance exports and improve farmers' income. This move comes ahead of assembly elections in Maharashtra and Haryana, with Haryana being a major producer of basmati rice along with Punjab.

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Boosting Exports and Farmers' Income

Commerce and Industry Minister Piyush Goyal stated that removing the Minimum Export Price (MEP) will help increase exports and benefit farmers financially. The Department of Commerce communicated that the USD 950 per tonne MEP on basmati rice has been lifted. "It has been decided to remove the current minimum export price (MEP) of USD 950 MT for issuing Registration-cum-Allocation Certificates (RCAC) for export of Basmati Rice," the communication noted.

In October 2023, the government had already reduced the floor price for basmati rice exports from USD 1,200 per tonne to USD 950 per tonne. This reduction aimed to address concerns that higher prices were negatively impacting outbound shipments. India's total basmati rice exports stood at USD 5.9 billion in 2023-24, compared to USD 4.8 billion in 2022-23, with a volume of 45.6 lakh tonnes.

Onion Export Restrictions Lifted

The Directorate General of Foreign Trade (DGFT) also removed the MEP on onion exports with immediate effect. This decision was made despite high retail prices of onions, which averaged Rs 50.83 per kg across India on Friday. The modal price was Rs 50 per kg, with a maximum price of Rs 83 per kg and a minimum of Rs 28 per kg.

In May, the government had lifted a ban on onion exports but imposed a USD 550 per tonne MEP, preventing farmers from selling at lower rates overseas. The DGFT stated, "The Minimum Export Price (MEP) condition on export of onions is removed with immediate effect and until further orders."

Government Measures to Stabilise Onion Prices

To provide relief from rising onion prices, the Centre began retail sales at a subsidised rate of Rs 35 per kg in Delhi-NCR and Mumbai starting September 5. NCCF and NAFED, which maintain a buffer stock of 4.7 lakh tonnes of onions for the government, have initiated retail sales through their stores and mobile vans.

Consumer Affairs Secretary Nidhi Khare mentioned that the outlook for onion availability and prices remains positive due to an increase in the kharif summer-sown area to 2.9 lakh hectares last month, up from 1.94 lakh hectares a year ago. Additionally, around 38 lakh tonnes of onions are still reported to be in storage with farmers and traders.

APEDA's Role in Basmati Rice Exports

The Agricultural and Processed Food Products Export Development Authority (APEDA) has been tasked with implementing the decision to remove the MEP on basmati rice immediately. APEDA will also closely monitor export contracts to ensure realistic pricing for basmati exports.

According to the Foreign Trade Policy, APEDA is responsible for registering all contracts for basmati rice exports and issuing registration-cum-allocation certificates. The basmati crop is typically grown during the kharif season.

The government's decision to scrap these minimum price thresholds aims to boost outbound shipments while supporting farmers' incomes ahead of key state elections.