A Boon for Farmers and Trade
In a
significant policy shift, the Government of India has removed the 20% export
duty on onions, effective April 1, 2025. This decision, formalized through a
notification by the Department of Revenue, follows recommendations from the
Department of Consumer Affairs. The move aims to support onion farmers while
ensuring stable domestic prices, especially with the arrival of rabi crops in
large quantities.
Background: Export Restrictions to Stabilize Domestic Supply
To prevent
shortages and control inflation, the government had imposed several export
restrictions on onions over the past year. These included:
- A 20% export duty introduced on September
13, 2024
- A complete export ban from December 8,
2023, to May 3, 2024
- A Minimum Export Price (MEP) mechanism to
regulate overseas shipments
These
measures were intended to maintain adequate supply within the country and
prevent excessive price hikes for consumers.
Export Trends Despite Restrictions
Even with
stringent controls, India’s onion exports remained significant. In the
financial year 2023-24, total exports stood at 17.17 lakh metric tons (LMT).
For 2024-25 (up to March 18), exports reached 11.65 LMT.
Notably,
the monthly export volume witnessed a sharp rise, increasing from 0.72 LMT
in September 2024 to 1.85 LMT in January 2025. This growth indicates strong
demand for Indian onions in global markets despite regulatory hurdles.
Impact on Prices and Market Dynamics
With the
removal of export duty, farmers can expect better returns on their
produce as they gain access to international markets without additional
financial burdens. The timing of this decision aligns with the peak arrival of
rabi crops, which has already contributed to price adjustments in the domestic
market.
- Mandi Prices: Although mandi (wholesale) prices remain higher than the previous
year’s corresponding period, they have seen a 39% decline in the
all-India weighted average modal price.
- Retail Prices: Over the past month, average retail onion prices have fallen
by 10%, providing relief to consumers.
Balancing Farmers’ Interests with Consumer Needs
The latest
decision highlights the government’s effort to maintain a delicate balance
between farmers’ earnings and consumer affordability. By lifting the duty
at a time when supply is increasing, the policy ensures that farmers benefit
from export opportunities without causing domestic price surges.
Conclusion
The removal
of the 20% export duty on onions marks a positive shift for India’s
agricultural trade. It reflects the government’s adaptive approach in
responding to both domestic and international market dynamics. While farmers
are expected to gain from better export prospects, consumers can still benefit
from stable onion prices due to adequate supply. Going forward, close
monitoring of price trends and trade volumes will be crucial in maintaining
this equilibrium.
Thanks For Reading
