India, the world's largest exporter of onions, has decided to extend its ban on onion exports indefinitely. This move, initially implemented in December, was expected to be lifted by March 31, as local onion prices plummeted and fresh supplies from the new season's crop flooded the market. However, the government's recent decision to extend the ban has sent shockwaves through the industry.
The announcement, made late on Friday, caught many traders off guard. "The extension is surprising and completely unnecessary, considering the falling prices with rising supplies from the new season crop," commented an executive at a Mumbai-based export firm.
Indeed, the price of onions in major wholesale markets in Maharashtra, India's largest onion-producing state, has witnessed a significant decline, dropping from 4,500 rupees per 100 kg in December to 1,200 rupees currently, as reported by the executive. This sharp decline led many to anticipate the lifting of the export ban, making the government's decision all the more unexpected.
Prime Minister Modi's administration faces upcoming general elections, scheduled to take place over almost seven weeks starting from April 19. With Modi vying for a third consecutive term, the timing of the export ban extension has raised eyebrows, prompting speculation about potential political motivations behind the move.
The ban's impact is not limited to the domestic market; it has sent ripples across several countries that heavily rely on Indian onion imports to meet their domestic demand. Nations such as Bangladesh, Malaysia, Nepal, and the United Arab Emirates have struggled with soaring prices since the imposition of the ban. "India's move is allowing rival exporters to quote much higher prices since buyers have no choice," remarked an executive at another export company based in Mumbai.
Traders estimate that India accounts for over half of all onion imports by Asian countries, owing to its shorter shipment times compared to competitors like China or Egypt.
In the financial year ending March 31, 2023, India exported a record 2.5 million metric tons of onions.
Follow us
