India Implements 40% Export Duty on Onion: Price Control and Local Market Focus


Price Control Measures in Focus Amidst Upcoming Festival Season

The Indian government has taken a significant step by imposing a 40% duty on onion exports until the close of this year’s calendar. This strategic move has been undertaken to regulate onion prices (Control Measures) in the retail sector and bolster its availability within the domestic market.

A notification from the Revenue Department of the Union Finance Ministry on Saturday unveiled this decisio. Stating that the directive would be effective immediately and extend until December 31, 2023.

Against the backdrop of anticipated onion price surges in September, the Ministry of Finance’s notification has emerged.

On August 18, 2023, the central government made a noteworthy announcement, revealing plans to release onions from its buffer stock in targeted regions.

This move seeks to ensure price stability as the new crop is await, expect to make its entrance in October. The Centre has proactively maintained a substantial buffer stock of 3 lakh tonnes of onions for the 2023-24 period. This strategic stockpile aims to address contingencies and stabilize prices amidst periods of constrained supply.

Industry experts are closely watching the situation, foreseeing the possibility of Indian onions becoming more costly in comparison to those sourced from China, Egypt, and Pakistan.

As a plausible consequence, the outlook for exports may decline. Further impacting the prices of this essential vegetable within the local market. Reflecting on the scenario, a Mumbai-based exporter highlighted.

Onions harvested during the summer months are rotting quickly, and the new supplies are being delaye. This situation has prompted the government to take precautionary measures,” as noted in a report.

The backdrop of these developments is India’s retail inflation, which surged to a 15-month high of 7.44% YoY in July.

This upward trajectory was predominantly attributed to heightened tomato prices, coupled with escalating costs of vegetables and cereals.

Amidst these dynamics, the Indian government’s move to impose an onion export duty seeks to stabilize local markets and maintain price equilibrium.