Why government has imposed 40% export duty on onions in India !

In an unprecedented move that aims to improve domestic availability and stabilize soaring onion prices, the government on Saturday imposed a 40 per cent duty on the export of onions to check price rise and improve supplies in the domestic market.

The Finance Ministry through a notification imposed a 40 per cent export duty on onions till December 31. The export duty comes amid reports that onion prices are likely to rise in September. Onions are a major export commodity for India, and substantial revenues are generated by trading entities who export onions to countries across the globe.

However, in recent months, domestic consumers have been reeling under the weight of escalating onion prices, triggered by lean supply season and weather-related challenges.Previously, the government said that it would release 3 lakh tonnes of onion from its buffer stock to boost availability.

The central government had already planned to keep 3 lakh tonnes of onions on hand as a buffer stock for the 2023-24 season. The government kept 2.51 lakh tonnes of onion as a buffer stock in 2022-23. If rates rise dramatically during the low supply season, a buffer stock is kept on hand to meet any emergencies and to keep prices stable.

Rabi onions harvested between April and June account for 65 percent of India's onion production and sustain consumer demand until the Kharif crop is harvested between October and November.

During the lean supply season, the procured buffer stocks are often issued through targeted open market sales as well as to states, union territories, and government agencies for supplies through retail outlets.