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Informist, Monday, Dec. 2, 2024

 

--Govt sources: Mulling hike in onion export duty to 40% to curb price rise

 

By Pallavi Singhal

 

NEW DELHI – The government is considering raising the export duty on onions to 40% from 20% to combat rising domestic prices, two government officials told Informist. This comes just two months after the export duty was cut to 20% on Sept. 13. The government had claimed at the time that the move was aimed at boosting exports and helping farmers get better prices. However, it was also seen as a political gesture ahead of the Maharashtra assembly elections, polling for which was held on Nov. 20.

 

The hike, according to one official, will bring down the country's exports from an average of about 100,000 tonnes per month right now to less than 10,000 tonnes. "While 100,000 tonnes is not a big number, it is adding to the pressure on supply and taking domestic prices up," the official said.

 

India, according to agricultural expert Deepak Chavan, consumes about 1.65 million tonnes of onion per month. "Thus, the country needs an average of 1.75 million tonnes of onion a month if we include processing waste. With exports continuing and supply low, prices have been pushed up," he said.

 

The pressure on prices and supply this year has come despite better acreage on the back of low carry-over stocks. "The carry-over stocks this time were very low and have already depleted to zero," Chavan said. "It was these rabi stocks that generally lasted us till the end of December, which has not happened this year. Moreover, kharif production, which was seen higher over last year, was hit by late rains in October, leading to an estimated damage of about 20%." 

 

Onion rabi acreage in the crop year 2023-24 (Jul-Jun) had plummeted to 821,000 hectares, against a sown area of 1.2 million hectares during the 2022-23 rabi season. Thus, as per Chavan, though kharif acreage for the crop year 2024-25 is seen at 380,000 hectares, up from 280,000 hectares last year, the rise has not been enough to make a difference.

 

The government's retail sales of onion at 35 rupees per kg in Delhi and Mumbai have also not helped. "We are facing issues in bringing our rabi supplies from Maharashtra to Delhi and other hot spots where prices are high," the official quoted earlier said. "Moreover, the sales have barely helped. With prices seen to be high till the end of January due to supply issues, we see this (raising of export duty) as a necessary step."

 

Onions were being sold at INR 51.75 per kg on Dec. 1 in retail markets and INR 4,343.5 per 100 kg in wholesale markets, according to data shared by the consumer affairs ministry. According to the latest CPI data, onion inflation was at 51.84% in October, down from 66.13% in September.

 

The Centre in May had lifted the ban on onion exports but imposed a minimum export price of $550 per tonne and a 40% export duty. In September, the government had removed the minimum export price stipulation and reduced the duty on onion exports to 20%. The reduction in export duty had come despite retail inflation in onion being over 50% then.  End

 

Edited by Rajeev Pai

 

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