India puts a 40% tariff on onion exports until December 31.


According to a senior government official, the decision has been made to improve the supply of onions on the domestic market, particularly in light of the impending festival season.

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The government has been fighting rising retail inflation, and in July, vegetable prices in the country increased by a stunning 37.34%. (PTI)
The government has been fighting rising retail inflation, and in July, vegetable prices in the country increased by a stunning 37.34%. (PTI)

 

According to a notification, the Union government put a 40% duty on onion exports till December 31 in order to limit international sales. The move comes amid expectations of price increases ahead of the holiday season, when demand for most commodities increases.
According to the most recent available data, retail inflation reached a 15-month high of 7.44% in July, driven by food costs. On August 11, the Centre said that it will begin releasing onion stocks from 300,000 tonne State-owned reserves in order to enhance supplies.
“The government has decided to impose a 40% duty on onion exports in order to increase the availability of onions in the domestic market, particularly in light of the upcoming festival season.” “There has also been a sharp increase in exports in recent times,” consumer affairs secretary Rohit Kumar Singh told HT.
According to wholesalers and economists, onion supplies are tightening in several regions, and the kitchen essential may soon face inflationary pressures due to an annual lean season when stockpiles fall.
The government had banned wheat export in May 2022 in order to contain soaring cereal prices. On July 20, 2023, it prohibited the export of rice, with the exception of the premium basmati strain.
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In comparison to many other vegetables, Indian consumers are extremely sensitive to onion costs. Despite ample bulb production, excessive rain and flooding have damaged significant quantities of stored onions in Maharashtra and Karnataka, which are major suppliers, dealers said.
“Farmers have reported a lot of damage to onion stocks, which are being attacked by fungi because of heavy rain, and supplies are less than before,” said Narendra Wadhwane, secretary of the Lasalgoan agricultural market committee in Maharashtra, Asia’s largest onion wholesale market.
In July, the consumer food inflation index jumped to 11.51%, while vegetable prices increased by a stunning 37.34%. Tomato prices increased by 201.54%. Ginger prices increased 177%, while garlic costs increased 70%. Green chillies grew by 50%. Greens including brinjal, okra, beans, pumpkin, and cauliflower were also on the menu. Prices for onions increased by 11.7%. Prices for potatoes and cabbage fell by 13.3% and 9%, respectively.
Unlike in the case of tomatoes or most greens, where high costs have squeezed household finances, the government can interfere in markets to lower prices by releasing federally-held onion inventories when supplies show symptoms of bottoming out.
Tariffs on an item’s export make it more expensive for importing countries, discouraging sales overseas and increasing domestic availability.
Cereal and vegetable prices drove the July inflationary surge. Since April, the main driver of inflation has been adverse weather. The monsoon’s late arrival had pushed back the planting of kharif, or summer-sown crops. Then, in July, heavy rains caused severe flooding. Throughout the month, two-thirds of India had nonstop rain. This strained supply, causing vegetable prices to rise.
According to scientists, climate change-related extreme weather has led to the critical scarcity. According to M Krishna Reddy, a former scientist at the Indian Institute of Horticulture Research in Bengaluru, rapid rainfall followed by intense heat in 2022 caused a surge in the number of plant viruses spread by aphids that feed on tomato plants in both Maharashtra and Karnataka. The Intergovernmental Panel on Climate Change has frequently warned that such weather changes in India are a sign of climate change.

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