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In a double move to boost onion exports, the Indian Finance Ministry has scrapped the minimum export price on onions and reduced customs duty on their exports from 40% to 20%. The reduction decision will come into effect from Saturday.
In key pro-farmer decisions, the central government said it had raised the basic duty on refined oil to 32.5 per cent, increased import duty on edible oils from zero to 20 per cent and removed the minimum export duty on basmati.
Prime Minister Narendra Modi hailed the decisions and said, “We are leaving no stone unturned in the interest of our farmer brothers and sisters who work day and night for the country’s food security. Whether it is reducing customs duty on onion exports or increasing customs duty on import of edible oils, many of these decisions will greatly benefit our food producers. While these decisions will boost their income, employment opportunities in rural areas will also increase.”
“Farmers will be able to get better prices for these crops and with more refineries in small and rural areas, employment opportunities will also increase there,” Agriculture Minister Shivraj Singh Chouhan said.
The decisions announced are aimed at boosting farmers’ income, ahead of upcoming assembly elections in Maharashtra, the world’s largest producer of the staple food.
In May this year, India lifted the ban on onion exports, but imposed a minimum export price of $550 per tonne, which essentially means farmers cannot sell their produce abroad at a price lower than that.
“The minimum export price (MEP) requirement on onion exports has been lifted with effect from now until further orders,” a notification issued by the Directorate General of Foreign Trade said.
According to data compiled by the Consumer Affairs Department, the average price of onions across India on Friday was Rs 50.83 per kg, while the typical price was Rs 50 per kg. The maximum price of onions is Rs 83 per kg and the minimum is Rs 28 per kg.
Last week, Consumer Affairs Minister Nidhi Khare said the outlook for onion availability and prices in the coming months remained positive, with the area under kharif cultivation increasing sharply to 2.9 hectares till last month against 1.94 hectares in the same period last year.
The 40% customs duty has been in place on exports since May 4 after being imposed to discourage onion exports to help lower its price in the local market.
India exported 2.6 million tonnes of onions till July of the current fiscal year, compared to 16.07 million tonnes of onions in the previous fiscal year.
