Government Imposes 40% Export Duty On Onions To Check Price Rise

The Union government has imposed a 40 per cent export duty on onions until December 31, 2023, in a bid to check the rising prices of the essential commodity. The duty will come into effect immediately. The decision comes in response to the recent surge in onion prices during this month. The government had previously taken measures to control the price of non-basmati white rice by imposing an export ban.

Over the past few weeks, onion prices have been steadily rising. Reports indicated that retail onion prices were expected to escalate by the end of August, with projections indicating a potential increase to approximately Rs 60-70 per kilogram next month. This increase in prices is primarily attributed to a supply shortage, as per a PTI report last week, citing Crisil Market Intelligence and Analytics.

The report by Crisil Market Intelligence and Analytics predicts that the demand-supply imbalance will likely impact onion prices towards the end of August. It anticipates a significant price surge from early September, potentially reaching Rs 60-70 per kilogram during a period of scarcity. However, these rates are projected to remain below the levels observed in 2020.

The report further highlights that due to a shorter shelf life of rabi (winter) onions and panic selling earlier this year, the stocks of rabi onions in the open market are expected to decline significantly by the end of August, rather than September. This extension of the lean season by 15-20 days is predicted to lead to tighter supplies and elevated prices.

This move comes in the wake of rising tomato prices since July. The government has initiated the provision of subsidized tomatoes to offer relief to consumers. According to the recent RBI bulletin, tomato prices exhibited an upward trend in August, although more recent data suggests a slight decrease in rates. The bulletin underscores that both onion and potato prices have witnessed a sequential increase.

Earlier, on August 11, the central government had announced the release of onions from its buffer stock in targeted regions, effective immediately, to ensure prices remain under control until the new crop arrives in October, as reported by PTI.

The Centre is exploring various avenues for onion distribution, including e-auction, e-commerce platforms, and collaboration with states to offer discounted rates through retail outlets managed by consumer cooperatives and corporations. The government is maintaining a stockpile of 3 lakh tonnes of onions under the Price Stabilisation Fund (PSF) to address any potential exigencies in case prices surge significantly during the period of low supply.