India Puts 40% Tax On Onion Exports As Inflation War Intensifies
The export duty comes amid reports that onion prices are likely to rise in September.
India has imposed 40% tax on export of onions to ensure domestic supply amid threat of price rise.
The Union Ministry of Finance, through a customs notification, imposed a 40% export duty on onions till Dec. 31, 2023. Consumer Affairs Secretary Rohit Kumar Singh said in order to increase the availability of onions in the domestic market, especially in view of the upcoming festival season, the government has decided to impose a 40% duty on onion exports.
"It was also being noticed that there was a sharp rise in exports in the recent past," Singh said.
The government had always used a minimum export price tool to curb onion exports. However, for the first time this year, export duty has been slapped for effective control of the outward shipment. Between Apr. 1 and Aug. 4, 9.75 lakh tonne of onions were exported from India. The top three importing countries in value terms are Bangladesh, Malaysia and the UAE.
According to the data maintained by the consumer affairs ministry, the all-India average retail price of onion stood at Rs 30.72/kg on Saturday, with a maximum price at Rs 63/kg and a minimum at Rs 10/kg.
Onion prices have started inching up amid reports of lag in onion coverage in the ongoing kharif season. According to the wholesale price index (WPI) data for July, onion inflation spiralled to 7.13%, against -4.31% in June.
The annual retail or consumer price inflation has touched a 15-month high of 7.44% in July, against 4.87% in June, amid a sharp spike in food prices.
Further, the Reserve Bank of India, in its August bulletin, said that onion and potato prices have registered sequential upticks, calling for improved supply to control price volatility. Tomato prices too are on the higher side, although more recent data indicates some pullback in prices.
The government has maintained 3 lakh tonnes of buffer onion this year. It has started disposing of it in the wholesale market since last week in key locations. So far, 2,000 tonnes of buffer onion has been sold in wholesale mandis of Delhi, Assam, Himachal Pradesh, Telangana and Andhra Pradesh, the consumer affairs secretary said.
The buffer onion is usually used for market intervention during the lean period between August and September till the arrival of the fresh crop from October onwards.
With inputs from PTI.
