India Ends Export Price Limits on Onion, Basmati to Aid Farmers

The government has abolished the minimum price thresholds for onion and basmati rice to enhance exports and boost farmers' income. This decision comes ahead of assembly elections in Maharashtra and Haryana. Haryana, along with Punjab, is a major producer of basmati rice.

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Removal of Minimum Export Price

The Department of Commerce announced that the USD 950 per tonne minimum export price for basmati rice has been removed. Commerce and Industry Minister Piyush Goyal stated, "The move will help boost exports and increase farmers' income." The APEDA has been instructed to implement this decision immediately and monitor export contracts for any unrealistic prices.

In October 2023, the government had reduced the floor price for basmati rice exports from USD 1,200 per tonne to USD 950 per tonne due to concerns that higher prices were affecting shipments. On August 27, 2023, the government decided not to allow exports of basmati rice below USD 1,200 per tonne to prevent illegal shipments of white non-basmati rice disguised as premium basmati rice.

Impact on Onion Exports

In another decision benefiting farmers, the Directorate General of Foreign Trade (DGFT) removed the minimum export price on onions with immediate effect. Previously, a USD 550 per tonne minimum export price was imposed in May when the government lifted the ban on onion exports. However, a 40% export duty on onions remains in place.

India exported 2.6 lakh tonnes of onions until July this fiscal year, compared to 16.07 lakh tonnes in the previous fiscal year. Despite high retail prices of onions, the government decided to remove the minimum export price condition. Data from the Department of Consumer Affairs showed that the all-India average price of onion was Rs 50.83 per kg on Friday.

Onion Price Relief Measures

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

Consumer Affairs Secretary Nidhi Khare noted that the outlook for onion availability and prices in the coming months remains positive as the kharif summer-sown area increased sharply to 2.9 lakh hectares last month from 1.94 lakh hectares a year ago. Additionally, about 38 lakh tonnes of onion are reported to be still in storage with farmers and traders.

Wheat Stock Holding Limits

Meanwhile, the Centre has tightened wheat stock holding limits for traders, wholesalers, big chain retailers, and processors to check price rise and hoarding. The revised stock limits on wheat came barely two months after they were imposed on June 24. These restrictions will remain in force until March 31, 2025, across all states and Union Territories.

India's total exports of basmati rice stood at USD 5.9 billion in 2023-24. During the previous fiscal year (2022-23), basmati rice exports were valued at USD 4.8 billion with a volume of 45.6 lakh tonnes. According to the Foreign Trade Policy, APEDA is mandated to register all contracts for basmati rice exports and issue registration-cum-allocation certificates.

The decision to remove these minimum export prices aims to support farmers by increasing their income through enhanced export opportunities.