Government bans onion export, puts limits on stocks amid rising prices

Retail onion prices have skyrocketed to Rs 60-80 per kg in Delhi and some other parts of the country due to supply disruption.

The government on Sunday initiated steps to increase the availability of onions in the domestic market and contain rising prices amid a seasonal shortage worsened by flooding in several states.

The Centre last month had also warned of strict action against hoarding of onion amid supply disruption due to floods in parts of major growing states - Maharashtra and Karnataka.(HT File Photo)

It banned the export of onion and imposed stock limits on traders to facilitate the release of stocks in the market and prevent hoarding of the vegetable.

The stock limit of 100 quintals on retail traders and 500 quintals on wholesale traders has been imposed across the country.

Onion prices have doubled in several cities, including Delhi, in recent weeks, prompting the government of the world’s biggest onion exporter to take steps to calm prices ahead of assembly elections scheduled to be held next month.

“Export of all varieties of onions...is prohibited with immediate effect,” the Directorate General of Foreign Trade (DGFT) said in a notification. The directorate deals with exports and import-related issues.

“The reported export below minimum export price (MEP) to Bangladesh and Sri Lanka will be immediately stopped and strict action will be initiated against those who are found to be violating this decision of the central government,” the ministry of consumer affairs, food and public distribution said, according to news agency ANI.

Earlier this month, DGFT had imposed a $850/tonne MEP to curb its shipments and check rising domestic prices.

The minimum export price refers to a floor price set for exports and no Indian onion exporter can export below this price level. This is a policy tool designed to curb exports by making Indian commodities expensive for foreign buyers in the hope that domestic supplies will improve.

The government has also attempted to bring down prices by releasing more onions from federal buffer stocks, prices have remained fairly high.

Retail onion prices have touched Rs 60-80 per kg in Delhi and some other parts of the country due to the disruption in its supply from flood-affected growing states like Maharashtra.

Haryana, Andhra Pradesh, Delhi, Tripura and Odisha have demanded onions from the Centre’s stocks. All states have been requested to specify their onion demand which could be met from the Centre’s stocks, an official said.

The Centre had said on Tuesday that the current stocks of onions are sufficient to tide over a lean season

The NAFED, the Centre’s food-trading arm, is responsible for managing the Centre’s onion buffer reserves. Another state-run trading agency, MMTC, has been asked to sign up for imports of an unspecified quantity, the Centre had said on Tuesday.

Last month, the Centre had warned of strict action against hoarding of onion amid supply disruption due to floods in parts of major growing states - Maharashtra and Karnataka.