The government today announced a hike in the minimum export price (MEP) of onion to $500 per tonne, to improve the domestic supply and curb prices that have gone up by 25 to 40 per cent in the retail markets over the past few weeks.
The decision was taken after a meeting of the inter-ministerial committee on 30 June noted that the wholesale and retail prices of onion are going up in producing and consuming mandies despite the imposition of a $300 per tonne minimum export price on onion.
''Keeping in view of rising retail and wholesale prices and delayed monsoon, the committee unanimously decided to fix the MEP at $500 per MT FOB, which translates to Rs30 per kg, with a view to arrest domestic price rise and augment domestic supply,'' an official release stated.
Retail prices of onion have risen to about Rs25-30 per kg, while the wholesale prices are ruling at Rs18.50 per kg in the national capital.
Last month, the government reintroduced the minimum export price (MEP) restriction on onion and ser the MEP at $300 per tonne, barely three months after the previous government abolished it in March amidst improved supplies of the staple.
MEP is the rate below which no exports are allowed.
Onion prices have been rising due to speculation amid anticipation of below normal monsoon despite sufficient supply in the country.
The wholesale price of onion at Lasalgoan in Maharashtra - Asia's largest onion market - has risen by about 80 per cent during June to Rs18.50 per kg.
Onion production is estimated to have risen to 192 lakh tonnes during 2013-14 crop year (July-June), from 168 lakh tonne in 2012-13. Exports meanwhile fell to 13.58 lakh tonnes last fiscal from 18.22 lakh tonnes in 2012-13.
The domestic demand during the lean period from June to November is met through stored rabi (winter) and fresh kharif (summer) produce.
Inflation is set to get a further boost with speculators stocking up prices of onion and potatoes, the two staples that the ordinary Indian home can never do without.