Retail prices of onion have risen to about Rs. 25-30 per kg, while the wholesale prices are ruling at Rs. 18.50 per kg in the national capital.
The decision to increase the onion MEP was taken on June 30 by an Inter-Ministerial Committee.
"Keeping in view, the rising retail and wholesale prices and delayed monsoon, the Committee unanimously decided to fix the MEP at $500 per tonne which translates to Rs. 30 per kg with a view to arrest domestic price rise and augment domestic supply," an official statement said.
The committee observed that "the wholesale and retail prices of onion are going up in producing and consuming mandies and despite MEP at $300 per tonne, there is no appreciable decline in the exports of onion."
Onion prices have been rising due to speculation amid anticipation of below normal monsoon despite sufficient supply in the country.
The wholesale price of onion at Lasalgoan in Maharashtra -- Asia's largest onion market -- has risen by about 80 per cent during June to Rs. 18.50 per kg.
Onion production is estimated to have risen to 192 lakh tonnes during 2013?14 crop year (July-June), from 168 lakh tonne in 2012?13. Exports meanwhile fell to 13.58 lakh tonnes last fiscal from 18.22 lakh tonnes in 2012?13.
The domestic demand during the lean period from June to November is met through stored rabi (winter) and fresh kharif (summer) produce.