India imposes new 40 pct export duty on onions following scanty rains

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India, the world’s biggest exporter of onions, has imposed a 40 percent export duty on onions with immediate effect. The additional duty will be in force until December 31 this year, reported the Emirates News Agency (WAM).

The UAE is among the biggest markets for Indian onions along with Bangladesh, Nepal, Malaysia and Sri Lanka.

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The curbs on export have been prompted by the scantiest rainfall in a century this month in onion-growing states in India, which are creating onion shortages in the domestic market.

August is the peak season in India for onion harvesting. Pakistan, China, and Egypt are among the other global exporters of onions.

The Ministry of Finance of India, which imposed the new export duty, wants to contain retail inflation caused by rising prices of vegetables and other food items.

Retail prices of onions were at 35 rupees (42 cents) a kilogram in Delhi on Friday, an increase of about 17 percent from January 1, according to data compiled by the food ministry. The national av-erage was 30.5 rupees that day.

This is the second recent effort by India to contain retail inflation caused by food prices. Last month, India imposed a ban on non-basmati white rice. India accounts for about 40 percent of the world’s source of exported rice.


The duty imposed by the world’s biggest exporter of onions will help New Delhi dampen local prices ahead of key state elections later this year but will force Asian buyers to shell out more, as other regional exporters have limited supplies.

“The export duty will make Indian onions more expensive than those from Pakistan, China, and Egypt. This will naturally lead to lower exports and aid in reducing local prices,” said Ajit Shah, an exporter based in Mumbai.

Average wholesale onion price in key markets has jumped nearly 20 percent from July to August, to 2,400 rupees ($28.87) per 100 kg on concerns that erratic rainfall would lead to lower yields.

“Onions harvested during the summer months are rotting quickly, and the new supplies are being delayed. This situation has prompted the government to take precautionary measures,” said another Mumbai-based exporter.

India’s onion exports in the first half of 2023 jumped 63 percent from a year ago to 1.46 million metric tons.

Countries such as Bangladesh, Nepal, Malaysia, United Arab Emirates and Sri Lanka rely on Indian shipments.

Onions are used as the base for traditional dishes across Asia such as biryani in Pakistan and India, belacan in Malaysia,
and fish curry in Bangladesh.

“The Indian duty would prompt China and Pakistan to raise prices, as they have a limited surplus for exports,” said the second exporter.

India’s annual retail inflation in July rose to its highest in 15 months as vegetable and cereals prices skyrocketed, putting pressure on the government to take action to bring down prices.

India surprised buyers last month by imposing a ban on widely consumed non-basmati white rice sales to dampen price

With Reuters & Bloomberg

Read more: India halts largest rice export category, triggering global food inflation fears

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