Rain and other natural disasters are causing a decline in onion production. As a result, despite government initiatives such as buying onions through NAFED and selling them at subsidized prices, onion prices in the Indian market have been growing for the past five to six months.

Due to opposition from farmers and their organizations, the government first proposed a 40% export duty on onions before lowering it to 20%. However, this did not have the desired effect of lowering exports and prices. Then, because this rate was not practical for all export destination countries, the government suggested 800$/Mt MEP (Minimum Export Duty) on onions, which somewhat decreased exports. And today, the Indian government made the significant decision to outright ban the export of onions.

India’s Export Objective

India has set an agri-export aim of $100 billion and an export objective of $1 trillion until 2030. Every government policy and piece of infrastructure is in line with this goal. Nevertheless, the Indian government has made unforeseen decisions to restrict or outlaw the export of certain goods, including sugar, rice, wheat, and others. Currently, exporting onions from India is prohibited until March 31, 2024.

Consequences of the Export Ban on Onions

What effects does this export ban on onions have?
India will be unable to accomplish Target of $100 billion for agri-exports
India’s portion of global onion exports will decline.
Countries with export markets will look for other suppliers.
India’s rivals, such as Egypt and Pakistan, will benefit.
Bangladesh and other nations may decide to import fewer Indian goods.
Farmers might decide not to grow this crop, which would raise prices.

India’s Export Market for Onions

We must examine supply and demand in global marketplaces in order to comprehend it. India exported 4522 crore rupees worth of onions in 21-22. India exported more onions to East Asian countries than to Gulf and European countries, if we look at the top ten export destinations by region.

India Onion Export (Region wise)
Region Countries Value Cr.
East 7 2908
Gulf 11 1499
Europe 2 30
Other 44 86
TOTAL 64 4437

The following are the top 10 onion exporting nations from India. You may view the amount of onions exported, their worth in Indian rupees, and the average rate that India received throughout the course of the year.

India Onion Export (Country wise)
SN Country Qty
000 Ton Value INR Cr. Value Rs/Kg
1 Bangladesh 671.13 897.29 13.37
2 Malaysia 393.46 848.78 21.57
3 U Arab Emts 403.22 784.77 19.46
4 Sri Lank 270.50 451.93 16.71
5 Nepal 174.76 267.71 15.32
6 Indonesia 116.70 221.85 19.01
7 Qatar 79.83 168.79 21.14
8 Vietnam 75.91 141.31 18.62
9 Oman 61.99 127.86 20.63
10 Kuwait 45.40 96.26 21.20
11 Singapore 35.48 78.82 22.21
12 Iraq 39.46 77.20 19.56
13 Saudi Arab 26.71 57.21 21.42
14 Baharain 27.52 57.08 20.74
15 Pakistan 24.01 44.80 18.66
16 Maldives 12.54 30.57 24.37
17 Mauritius 8.46 27.55 32.58
18 Afghanistan 13.56 27.10 19.99
19 U K 5.72 16.26 28.43
20 Greece 6.66 14.05 21.10

This judgment will affect Bangladesh, Sri Lanka, and the United Arab Emirates if you look at the top three on this list. Due to the erratic actions of the Indian government, these nations would have to locate alternate sources of onions, something they have been doing since last year.

Rate of Onion Exports

Other rivals including China, Pakistan, Egypt, Turkey, Afghanistan, and the Netherlands will benefit from the prohibition on Indian onion exports. India’s move will assist its largest rival, Pakistan. The price of onions in Pakistan is lower than in India. If an Indian onion costs 260 LKR per kilogram in Sri Lanka, a Pakistani onion will cost about 220 LKR per kilogram. However, Pakistani and other countries’ onions taste sweet, while Indian onions are spicy. Additionally, if you look at the onion market in Dubai, United Arab Emirates, the price of an Indian onion is 2 AED/kg, whereas the price of a Pakistani onion is approximately 1.20 AED/kg. As a result, all international markets will choose onions from other nations, which could pose a danger to Indian onions in the future as consumers grow accustomed to cheaper and onion’s sweet flavour. India’s share of the global onion export market may decline as a result.

Exports of Indian onions were made to Bangladesh, Malaysia, the United Arab Emirates, and Sri Lanka. The average price for Indian onions was 32 rupees per kilogram in Mauritius, 28 rupees per kilogram in the UK, and 25 rupees per kilogram in the Maldives. Oman, Qatar, Vietnam, and Indonesia are further possible markets. These markets should be investigated by new exporters.

India’s Leading States for Onion Production

The major onion-producing states in India will be impacted by the decision to ban onion exports. Farmers in these states are already dissatisfied with past decisions made by the government. Long-term crop output may be impacted by this since farmers may choose to grow different crops, which could make the issue worse.

Indian Production of ONION 2021-22
Production (000 Tonnes)
SN State Production Share (%)
1 Maharashtra 13301.7 42.73
2 Madhya Pradesh 4740.6 15.23
3 Karnataka 2779.5 8.93
4 Gujarat 2554.7 8.21
5 Rajasthan 1447.9 4.65

Onion farmers, traders, and exporters in these areas are faced with a quandary over their future export plans. The administration will reevaluate this choice because many people believe that a new crop will be available in January 2024.

In conclusion

Similar to onions, import-export rules are posing problems for other commodities like as wheat, rice, sugar, soybeans, toor, moong, cotton, and milk. Uncertain export regulations are hurting companies of all sizes and upsetting the entire economic cycle. Farmers, traders, and exporters have suffered significant losses as a result of the onion export ban, which led prices to drop by 5–6 Rs/kg on the first day alone. The government should take into account the issues facing everyone, including farmers, because one segment of society cannot be safeguarded by disregarding another. The government should allow enough time to exporters and traders to schedule their shipments and prevent damages. The entire nation In order to make further plans, farmers and exporters are waiting for the Indian government to provide clarification on the export-import policy.