India bans export of onions until March to improve domestic supply

NEW DELHI, Dec 8: India has banned the export of onions until March next year to boost domestic supplies and contain consumer inflation.

The government decided to move onion exports from the free category to prohibited till March 31, according to a Directorate General of Foreign Trade (DGFT) notification.

Rising food prices in the world’s most populous country can be a politically explosive issue, especially in view of next year’s parliamentary election.

With the onion being a key ingredient in Indian cooking, its shortage and high prices have the potential to cause upsets in Indian politics.

Retail onion prices have risen to about 80 rupees (US$1 = 83.3 Indian rupees) in Delhi, almost double of October prices.

The government fixed the floor price for exports at US$800 per tonne in October until the end of 2023.

However, with the export ban, the government hopes to ensure domestic prices remain affordable to average consumers.

It is one of many measures India has taken to contain food inflation.

The Consumer Affairs Ministry on Friday halved the limit of wheat stocks wholesalers and retailers can keep.

The step was taken “to manage the overall food security and to prevent hoarding and unscrupulous speculation,” it said in a statement.

India, the world’s biggest sugar producer, on Thursday also ordered sugar mills and distilleries to refrain from using sugarcane juice or sugar syrup for ethanol production.

The country earlier this year halted the export of non-basmati white rice amid depleting domestic supplies, causing ripples in the global food market.

The government has relaxed the restriction on grounds of food security by allowing some export deals to a few countries on a bilateral basis.

With the 2024 elections approaching, the government is expected to grow more sensitive to the domestic supply situation of main food items and ingredients.