Govt Extends Onion Exports Ban Till Further Notice Ahead Of General Election

The Directorate General of Foreign Trade (DGFT), a branch of the ministry responsible for handling export and import affairs, announced the extension in a notification dated March 22

Govt Extends Onion Exports Ban

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The government has decided to extend the ban imposed on onion exports until further notice, according to a notification from the commerce ministry. Initially, the prohibition was set to expire on March 31 of this year. The Directorate General of Foreign Trade (DGFT), a branch of the ministry responsible for handling export and import affairs, announced the extension in a notification dated March 22, as per a report by the news agency PTI.

India holds the title of the world's largest exporter of onions; the ban on onion exports was put into effect in December and was initially scheduled to conclude on March 31. Traders had been expecting the ban to be lifted, especially considering the significant drop in local prices, which have decreased by more than half since the implementation of the export restrictions. Additionally, the current crop season has yielded fresh supplies, further fueling expectations of a lift on the ban.

However, contrary to expectations, the government issued a directive late on Friday stating that the ban would persist until further notification.

”The extension is surprising and completely unnecessary, considering the falling prices with rising supplies from the new season crop,” Reuters quoted an executive at a Mumbai-based export firm saying.

In several wholesale markets across Maharashtra, which stands as the largest onion-producing state in India, prices have seen a significant decline. According to reports, prices have plummeted from 4,500 rupees per 100 kg in December to 1,200 rupees per 100 kg. This substantial decrease in prices reflects a notable shift in market dynamics.

The ban on onion exports has had far-reaching effects beyond India's borders, particularly in countries like Bangladesh, Malaysia, Nepal, and the United Arab Emirates. These nations heavily rely on imports from India to meet their domestic demand for onions. Consequently, the imposition of the export ban has exacerbated supply shortages and led to soaring prices in these countries, presenting a significant challenge for their economies.

”India’s move is allowing rival exporters to quote much higher prices since buyers have no choice,” Reuters quoted another executive at an export company based in Mumbai as saying. According to traders' estimates, India, known for its relatively shorter shipment times compared to competitors like China or Egypt, is responsible for over 50 per cent of all onion imports by Asian nations. 

In the fiscal year concluding on March 31, 2023, India achieved a historic milestone by exporting a record 2.5 million metric tons of onions.

Meanwhile, Prime Minister Narendra Modi is aiming for a third consecutive term in office after the upcoming elections, so this marks a significant move by the government ahead of the general polls.