More reports on: Trade, Government policies, Commodities

Govt scraps minimum export price for onions as prices crash

26 December 2015

The Narendra Modi government on Friday decided to scrap the minimum export price (MEP) on onions, in view of the sharp decline in wholesale prices in major producing and consuming mandies and the huge increase in supplies.

The move is expected to encourage exports of onions, thereby arresting the continuing fall in prices.

''Export of onion for the item description at Serial Number 51 & 52 of Chapter 7 of Schedule 2 of ITC (HS) Classification of Export & Import Items shall be permitted without any Minimum Export Price (MEP),'' a notification by the Directorate General of Foreign Trade (DGFT) said.

''All varieties of onions as described above can be exported without any minimum export price (MEP),'' the notification added.

MEP is the rate below which no trader is allowed to export. The rise in MEP restricts exports and improves domestic supply.

In August, the government had raised the MEP for onion to $700 per tonne, from $425, as retail prices touched Rs100 a kg levels.

Earlier this month, government had slashed the minimum export price for onions to $400 per tonne from $700 to encourage exports of the commodity.

"Keeping in view of sharp decline in wholesale prices of onion in producing mandies of Maharashtra and major consuming mandies and huge arrivals of onion, the government decided to reduce the MEP to 'Zero' from USD 400 per tonne," it said on Wednesday.

The Maharashtra government had recently asked the centre to scrap the minimum export price for onions to help boost overseas shipments after wholesale prices of the bulb went down to the Rs10 per kg level.

According to the National Horticultural Research and Development Foundation (NHRDF) data, wholesale prices are ruling at Rs10-14 per kg at Asia's biggest wholesale market for onion at Lasalgaon in Maharashtra, much lower than its peak of Rs57 per kg in August.

In a tweet, commerce and iIndustry minister Nirmala Sitharaman said: "Notification issued by the DGFT removing the minimum export price for onion exports will help farmers realise better price".

In another tweet, Transport Minister Nitin Gadkari said, "Welcome Ministry of Commerce & Industry decision on removing MEP for onions. This would help onion growers in this hour of need."

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