In an unforeseen policy shift, the Indian government has allowed a partial lift on the previously indefinite ban on onion exports. A directive communicated on Thursday authorizes the “immediate” export of 2,000 tonnes of white onions, a variety primarily harvested in the state of Gujarat. This development arises just ahead of the upcoming local elections, with white onions set to depart from three nominated ports.
Details emerging from a notification by the Directorate General of Foreign Trade (DGFT) revealed that only white onions certified by the Commissioner of Horticulture from Gujarat would be eligible for export. This departs from prior relaxations in the ban where specified destination countries were stipulated, and exports were required to be routed through the National Cooperative Exports Limited (NCEL). Instead, the present decree mandates that shipments must be made through the ports of Mundra and Pipavav in Gujarat or Nhava Sheva in Mumbai, with no specific export destinations or intermediaries outlined.
This announcement surfaces after Gujarat’s horticulture exporters sought clarity from the Ministry of Commerce and the DGFT on April 13 regarding any potential easing of white onion export curtailments, amidst indications of ongoing procurement of export-grade white onions at one of the state’s Agricultural Produce Market Committees (APMCs). Significantly, Gujarat, particularly districts like Bhavnagar and Amreli which are prepping for elections on May 7, remains a major hub for the production and exportation of white onions across India.
The ease in restrictions, however, has sown seeds of concern amongst onion producers from adjacent states such as Maharashtra, where red onions predominate. A clash of interests appears to be emerging, with a representative from Nashik voicing the predicament: Should farmers from other regions not be afforded equal export privileges, especially when the local wholesale rates for red onions have stabilized?
Representing industry perspectives, Ajit Shah, president of the Horticulture Produce Exporters’ Association (HPEA), acclaimed the government’s decision to allow white onion exports without setting restrictive destination or mediation criteria. Shah advocates for similar liberalizations to be extended to red onions as well as to the smaller onions not traditionally consumed in local markets. He highlighted the disparity in wholesale prices, with red onions dipping to around ₹11 to ₹12 per kilogram, while white onions fetching about ₹16 to ₹17. With a nearly six-month-old export ban causing domestic surpluses and depressed pricing, Shah suggests that any subsequent export permissions should be unbarred, allowing all traders and farmers to participate.
The backdrop of this policy tweak is the federal government’s preemptive ban on onion exports initiated in December 2023, aimed at averting a potential domestic shortfall of this politically sensitive commodity. Although the export ban was extended indefinitely last month, the government kept an opening for exports in response to specific requests through diplomatic channels.
In what could be seen as calibrated relaxations, earlier on March 1, exports amounting to 14,400 metric tonnes were granted for the United Arab Emirates, with a quarterly restriction of 3,600 metric tonnes. Following this, two additional notifications this month sanctioned the export of a further 20,000 metric tonnes to the UAE as a supplementary quota, plus 10,000 metric tonnes destined for Sri Lanka.
The selective relaxation of the onion export embargo predominantly benefits the white onion sector in Gujarat, perhaps a tactical move considering the imminent local elections within the state. While it represents a shimmer of hope for the industry, the demand for uniform relaxation across various categories of onions and states intensifies, laying bare the complexities of agricultural policy and trade amidst political considerations.
