Export duty on onions strategically timed to help domestic supply, says top official

New Delhi: Amid ongoing protests by farmers and traders against the newly imposed 40% export duty on onions, the government has clarified that the decision was not hasty but a well-timed move aimed at enhancing domestic supply and stabilising retail prices.

Union Consumer Affairs Secretary, Rohit Kumar Singh, said: "It is not a premature decision to impose an export duty on onions. It is a timely decision taken to increase the domestic availability and check prices."

This clarification comes in the wake of farmers' protests taking place in various areas of Nashik district in Maharashtra, where discontent has arisen over the recent imposition of the 40% export duty on onion. Traders are also expressing their opposition to this move.

Singh, underscored that the decision was calculated and in line with the goal of bolstering domestic onion availability and curbing price fluctuations. He added that the government would continue to take action as needed, including releasing buffer stocks of onions in wholesale and retail markets in selected states.

To address immediate concerns, the government has initiated the release of buffer onions in key states such as Delhi, Telangana, Andhra Pradesh, Himachal Pradesh, and Assam. Over the past two days, around 2,500 tonnes of onions were sold at a subsidised rate of Rs 25 per kilogram in the Delhi-NCR region.

The recent imposition of a 40% export duty on onions was precipitated by increasing signs of price hikes and escalating outward shipments. This move, being implemented for the first time, is also aimed at stabilising onion prices ahead of the festive season.

The escalating retail prices of onions in Delhi, which have soared to nearly Rs 40 per kilogram, emphasise the urgency of addressing this issue.

There has been a surge in onion exports, with 9.75 lakh tonnes being exported between April 1 and August 4 of the current fiscal year. The primary importing nations, in terms of value, are Bangladesh, Malaysia, and the UAE.

In response to this situation, traders in the Nashik district, including the largest wholesale onion market at Lasalgaon, have indefinitely suspended onion auctions. However, auctions were reported to have continued in Vinchur, also within the same district.

Besides the export duty, the central government also revealed plans to procure an additional 2 lakh tonnes of onions to maintain a total buffer stock of 5 lakh tonnes this year. The initial target for the current fiscal was set at 3 lakh tonnes, which has already been achieved.

The buffer stock serves as a crucial measure under the Price Stabilisation Fund (PSF), providing flexibility to address market exigencies and prevent significant price fluctuations during periods of lean supply.

As part of the strategy to manage the buffer stock, the government is disposing of onions in targeted markets across states and union territories where retail prices exceed the national average or have witnessed significant increases in the past month.

Onions from the buffer stock are also being made accessible to retail consumers at a subsidised rate of Rs 25 per kilogram through the retail outlets and mobile vans of the National Cooperative Consumers' Federation of India (NCCF) from August 21 in key markets. This initiative is geared towards ensuring essential food commodities remain affordable for the masses.