India on Saturday (August 19) imposed a 40% tariff on export of onions till December 31 to restrict overseas sales, according to a notification. The move comes amid anticipation of price rise ahead of the festival season when demand for most commodities goes up.
Indian government has been battling high retail inflation, which soared to a 15-month high of 7.44% in July, led by food prices, latest available data show. On August 11, the Centre announced it would start releasing stocks of onion from State-owned reserves of 300,000 tonne to boost supplies.
“In order to increase the availability of onions in the domestic market especially in view of the upcoming festival season, the government has decided to impose a 40% duty on the export of onions. It was also being noticed that there was a sharp rise in exports in the recent past,” consumer affairs secretary Rohit Kumar Singh said.
Onion supplies are tightening in some markets and the kitchen staple could soon see an inflationary spell due to an annual lean season when stocks dip, wholesalers and analysts have said.
To stem rising cereal prices, the government had banned wheat export in May 2022. On July 20, 2023, it banned the export of rice, barring the premium basmati variety.
Indian consumers are particularly sensitive to onion prices relative to many other vegetables. Although production of the bulb has been adequate, heavy rain and flooding have damaged substantial quantities of stored onions in Maharashtra and Karnataka, which are major suppliers, traders said.
“Farmers have reported a lot of damage to onion stocks, which are being attacked by fungi because of heavy rain, and supplies are less than before,” said Narendra Wadhwane, secretary of Lasalgoan agricultural market committee, Asia’s largest onion wholesale market in Maharashtra. _Hindustan Times