In a significant policy shift, the Indian government has announced the removal of the 20% export duty on onions, effective April 1, 2025. The move, which is expected to boost onion exports, has raised concerns over a potential price hike in the domestic market.
Why Was the Export Duty Removed?
The government had initially imposed a 20% export duty on onions in August 2023 to stabilize domestic prices and ensure adequate supply within the country. However, with improved production and farmer protests over falling onion prices, the decision to lift the duty has been taken to support farmers and exporters.
Agriculture and trade experts believe that this will open up new export opportunities, particularly to Gulf nations, Bangladesh, and Southeast Asian countries, where Indian onions have a strong demand.
Impact on Onion Prices in India
While the decision benefits exporters, there are concerns that it might lead to a spike in onion prices for Indian consumers. Historically, onion exports have contributed to price volatility in the domestic market, with increased global demand often leading to reduced availability and higher prices for Indian buyers.
Retailers and wholesalers are already anticipating a gradual increase in onion prices in the coming weeks, depending on how exports pick up post-April 1.
Farmers Welcome the Move
Farmers, particularly in onion-growing states like Maharashtra, Karnataka, and Madhya Pradesh, have welcomed the decision, as the export duty had significantly impacted their earnings. The removal of the duty is expected to ensure better returns for onion farmers who had been facing losses due to low prices in recent months.
A farmer from Nashik, Maharashtra, stated, “We had been demanding the removal of the export duty for a long time. Now, we hope to get better prices for our produce.”
Government’s Stand
The central government has assured that measures will be taken to prevent excessive price hikes in the domestic market. Officials have hinted that if onion prices rise sharply, buffer stock releases and import controls could be considered to stabilize the situation.
With onion being a politically sensitive commodity in India, all eyes will now be on how prices behave in the coming months. Will this decision benefit both farmers and consumers, or will it lead to inflationary pressure on households? Only time will tell.
