The Hindu Business Line : Government says licensing for onion export temporary

‘Frequent jacking up of minimum export price (MEP) of onion through administrative orders would erode India’s market position when it exported a record 1.13 million tonnes of onion during 2006-07.’

G. Srinivasan

New Delhi, Oct 5 With the Directorate-General of Foreign Trade (DGFT) issuing a late night notification on Thursday restricting export of all varieties of onion including rose onions and Krishnapuram onions only by licence through designated canalising agencies, the Government has made its intentions clear that the domestic price flare-up of onion ought to be leashed.

Temporary measure

Officials in the Department of Commerce told Business Line here that the licensing route to leash export is only “a temporary measure to tide over domestic tight availability position and to stem the accompanying spurt in domestic prices of this essential item”. They premise their belief in onion prices coming down in the coming weeks in the domestic market including in the Capital where it is being sold at Rs 30-35 per kg, on the fact that area under onion cultivation in the ongoing kharif season is likely to increase by 16 per cent and the consequent spurt in production is likely to be about 20 per cent.

The higher production stems from good rains in almost all the kharif growing States and extant better prices for onion.

Kharif Harvesting

They said kharif onion harvesting for early planted crop had started in August in Andhra Pradesh, Karnataka and Tamil Nadu. In Maharashtra, early crop began early last month and Gujarat and Rajasthan from this month onwards. They further point out that major harvesting of kharif onion would be from next month and kharif onion is not to be stored as huge production comes from rabi season crop which gets harvested from March end. Good quality produce is stored during April-May.

They maintain that the tight supply situation would be overcome and prices would be subdued soon.

In the face of domestic flare-up in onion prices in certain regions and not all across the country, exporters feel that any restrictions placed on export would undermine India’s well-established overseas markets as both China and Pakistan have been posing tough competition, particularly the latter which has a bumper onion crop this year.

Impact on exports

The officials said that frequent jacking up of minimum export price (MEP) of onion through administrative orders would erode India’s market position when it exported a record 1.13 million tonnes of onion during 2006-07.

They cited last month upward revision in MEP to $445 per tonne to Gulf countries as contributing to the lowest export figure of 40,490 tonnes of onion shipped in September 2007. Overall, they said, the country’s onion exports during the first half of the current fiscal nosedived by a hefty 37 per cent from 6.05 lakh tonnes in the first half of last fiscal to 3.84 lakh tonnes.

Rose onions

Exporters say rose onion is grown for export market only and there has been a steady increase in rose onion production during the last three years from 35,100 tonnes in 2004-05 to 46,333 tonnes in 2006-07. More than 90 pr cent export of rose onion is to Malaysia and the restriction on its export through licensing would add to the cost of exporters.

However, the Minister of State for Commerce, Mr Jairam Ramesh, justified the limited restrictions on export stating that “most important is domestic concerns over price rise of essential items such as onion as the government’s social priority dictates that export should not be at the cost of overriding domestic concerns of prices of essential items of mass consumption”.