The government is considering importing onions to boost domestic availability of the commodity and prevent a spike in its prices.
Retail prices of onion have already risen by up to 40% in metro cities in the last one year.
The maximum increase in prices is seen in Delhi, where onion is costing Rs 34 per kg at present, as against Rs 24 per kg in the year-ago period, as per data maintained by the consumer affairs ministry.
"The issue was discussed in a meeting of the Committee of Secretaries last week. It recommended the Commerce Ministry to look at the possibility of imports to boost supplies in the market and keep a lid on prices," sources said.
Last week, the government increased the minimum export price of onion to $425 a tonne from $250 a tonne to restrict exports and increase domestic availability.
Prices in both wholesale and retail markets have started increasing due to sluggish supply of good quality onions in the wake of the crop being damaged in storage in major growing states, including Maharashtra, a Nasik-based trader said.
Much of the Rabi onion crop is stored to meet the demand in lean period. But this year, most of the onion kept in storage is of poor quality as the Rabi crop got damaged due to unseasonal rains in early March in Maharashtra and Gujarat, the trader said.
According to agri-experts, high storage losses are likely to reduce availability of onion in the market and put pressure on prices till the arrival of new kharif crop from mid-September.
The wholesale price of onion has risen to Rs 16-17 per kg from Rs 11 per kg in last one month at Lasalgaon in Maharashtra, Asia's biggest onion market.
To check prices, the government had imported a small quantity of onion last year too. It had also eased fumigation norms for smooth shipment of onions.
The country's onion production is estimated to have declined to 189.23 lakh tonnes in the 2014-15 crop year (July-June), as against 194 lakh tonnes in the previous year, as per government data.
The country's onion exports declined to 10.86 lakh tonnes in the 2014-15 fiscal due to high MEP (minimum export price), as against 13.58 lakh tonnes in the previous year.