The onion trade has put forth a request to the government, urging the introduction of a minimum price to be used in the calculation of export duty for onions. This plea is driven by the intention to create a level playing field for all stakeholders, especially in light of the detrimental effects that bans and restrictions on wheat and rice exports have inflicted on businesses.
Read More: India prohibits non-basmati white rice exports amidst supply concerns
On Saturday, the central government imposed a 40% export duty on onions as a response to the steep fourfold surge in retail prices witnessed within the last two months. Notably, the official duty declaration did not include any reference to a minimum price. This omission has sparked concerns within the trading community, which argues that the absence of a specified floor price might potentially confer undue benefits upon certain ports and stakeholders involved in the onion trade.
Read More: Govt enforces 40% export duty on onions in effort to counter soaring prices
“It is necessary to determine a floor price for calculating the export duty on onions across different land and seaports. We fear that there may be a disparity in the floor prices being considered for the calculation of export duty on onions across different ports,” Ajit Shah, president of Horticulture Produce Exporters’ Association (HPEA), said in a letter to the government.
In the meantime, industry executives have reported that the recent bans and limitations on the export of wheat, rice, and now onions, constitute part of the government’s strategy to curb the rapid escalation of domestic food prices. These measures, however, are resulting in revenue losses and an accumulation of inventory for businesses in the sector.
Two executives from non-basmati rice exporting companies have expressed their challenges in managing unsold inventory at ports due to the abrupt ban on non-basmati rice exports imposed on July 20.
Towards the end of the previous week, the government announced that there would be “exemptions” to the export ban on non-basmati white rice, specifically for varieties that are semi-milled, wholly milled, polished, and glazed.
The prohibition, which was imposed due to non-basmati rice prices soaring over 30% since October of the previous year, compounded with prior partial export limitations in 2022. During that time, India had forbidden the export of broken rice and levied a 20% tariff on non-basmati rice exports.
“The agri business faced setbacks due to export restrictions on wheat and rice in the April-June quarter,” ITC, the country’s largest wheat exporter, said in its earnings call last week. “These restrictions have resulted in lower business opportunities and weighed on segment revenue during the quarter,” it said.
India had banned exports of wheat in May last year.
Akshay Gupta, business head of bulk exports at KRBL, the country’s largest basmati rice exporter, said, “There is a fair bit of anticipation on what is happening in the global rice market. Prices have gone up, but we expect the surge to be a short-term one.”
Meanwhile, onion traders in Nashik, the largest onion cultivation region in the country, chose to observe a market closure on Monday as a form of protest against the imposed export duty on onions.
“Onion farmers had been incurring losses for the entire last year due to subdued prices. Many of them haven’t yet received the subsidy amount that the government had announced to compensate for their losses,” Jayadatta Holkar, director of Mumbai APMC, said, explaining the trade’s displeasure.