Govt imposes 40% export duty on onions to check inflation, bolster domestic market

The government on Saturday imposed a 40 per cent duty on the export of onions to increase domestic availability amid signs of increasing prices.

The export duty, which is the first time ever on onion, has been imposed as the retail sale price of the kitchen staple, according to government data, touched Rs 37/kg on Saturday in Delhi.

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

Between April 1 and August 4 this fiscal, 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.

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.

As per the data maintained by the consumer affairs ministry, 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, as per the data. The trade data showed onion prices ruling at Rs 50 per kg in the national capital.

Onion prices have started inching up amid reports of lag in onion coverage in the ongoing kharif season.

According to the wholesale price index (WPI) data for July, onion inflation spiralled to 7.13 per cent, against (-)4.31 per cent 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.

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.

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.