India’s Onion Farmers At Loss in Global Market Due to High Export Duty

Indian onion farmers may be seeing a tough competition in the global market. As per a recent economic analysis report, Indian onions are losing the race to the global onion market. The reason for this is pertained to the heavy export duty imposed by the Union government. 

The government banned onion export in December 2023 fearing shortages in domestic market. However, ahead of Lok Sabha elections, it lifted the ban but imposed a 40% export duty on onions in May 2024. This export duty was lowered in September last year before the Maharashtra Assembly elections. The government reduced it to 20%, which is where it stands today.

The hike in export duty obviously hiked the price of Indian Onions in the global market that led international  buyers to import onions from other countries, such as China and Pakistan.

“Our prices are $350 a tonne and Pakistan is offering onions at $280. The 20 per cent duty is making it difficult for Indian onions in the global market,” Ajit Shah, President, the Horticulture Produce Exporters Association (HPEA) remarked in a media statement.

Exporters from Kerala used to despatch onions to Gulf markets after procuring them from Nashik in Maharashtra. But, the hike in export duty led  Indian onions to lose the competitive edge.

Earlier, on August 19, 2023, a 40% export duty was first imposed and a minimum export price of $800 per metric ton was fixed till December 31, 2023. On December 8, the government banned onion exports. 

This was because prioritizing to control domestic food inflation.

Because of the export duty the returns are not good for onion farmers, even after having a high production. Pakistan, China, Sudan, Turkey, Iran, Egypt and Holland are among countries that have made their ways into India’s traditional markets.