India greenlights onion export to Sri Lanka and UAE
What's the story
The Directorate General of Foreign Trade (DGFT) has announced that India has approved the export of 10,000 tons of onions to Sri Lanka.
This decision was facilitated via National Cooperative Exports Limited (NCEL).
Despite a ban on shipments implemented in December 2023, India has now sanctioned a total export of 79,160 tons of onions.
Additionally, the Indian government has authorized an extra 10,000 tons of onion exports to the United Arab Emirates, over the previously permitted 24,400 tons.
Factors
Global shortage and weather conditions influence decision
The decision to increase onion exports comes in response to a global shortage, and a dry spell caused by the El Niño weather phenomenon.
These conditions led to restrictions on onion exports during the fiscal year 2023-24.
On December 8, 2023, the Centre initially prohibited onion exports until March 31, 2024.
However, this ban has now been extended indefinitely according to a DGFT notification.
Price management
Government measures to manage onion costs
To control soaring onion costs, the government imposed a minimum export price (MEP) of $800 per ton from October 28 till December 31, 2023.
Additionally, a duty of 40% was levied on onion exports until December 31, 2023, to bolster domestic supplies.
The DGFT notification stated that onion exports will, however, be allowed on permission granted by the Centre, based on requests made by other countries.
Steps
Centre utilizes buffer stock to tackle onion prices
To combat escalating prices of onions, the Centre has been using onions from its buffer stock.
It had previously decided to maintain a buffer of three lakh tons of onions for the 2023-24 season.
In the 2022-23 season, a buffer stock of 2.51 lakh tons was maintained and rabi onion procurement started in April for the 2024-25 season, earlier than the usual start in June.
The government aims to procure five lakh tons of onion in the 2024-25 rabi season.
Inflation
India's retail inflation drops to 10-month low
Speaking about food prices, India's retail inflation dropped to a ten-month low of 4.85% last month, falling below 5% for the first time since November 2023.
This decrease was attributed to slower price increases for food items like milk, eggs, milk products, pulses, fruits, and spices.
Despite this drop in the inflation rate, it still exceeded the central bank's target of 4%, but remained within its tolerance range of 2-6%, for the seventh consecutive month.