After garlic and apples, Indian consumers will soon get a taste of Chinese onion.

In a frantic bid to check the spiralling retail prices of onion across the country, the Government has decided to import more of the bulb from China and Egypt by diluting quarantine norms.

And to preclude the possibility of cheaper varieties of onion getting exported, the Government has imposed a Minimum Export Price (MEP) of about $650 a tonne on the regular variety (common big onion). The Directorate-General of Foreign Trade issued a notification in this regard late Wednesday. Varieties, such as Bangalore Rose and Krishnapuram, which are hardly consumed in the domestic market due to high pungency and are mostly exported to the Far- East will, however, be exempt from the MEP norm.

These decisions were taken by the inter-ministerial group (IMG) of officials from the Ministries of Commerce, Agriculture and Consumer Affairs that has been monitoring the situation arising out of the rise in onion prices. The group met on Wednesday to weigh various options to augment supplies in the local markets as retail prices of onion touched Rs 80 a kg in some parts of the country.

Hoarding

The IMG feels hoarding of onion is a major reason for the rising prices as arrivals in the markets were much lower than the fall in production, an official from the Commerce Ministry said. According to NAFED, an apex organisation of marketing cooperatives for agricultural produce in the country, supplies in August this year at 17,000 tonnes were about a third of the 45,000 tonnes of onion supplied during the comparable period last year, while the drop in production was just about 15 per cent. In Lasalgaon, Asia’s largest onion market, the modal price (at which most trades took place) touched a new high of Rs 44,000 a tonne on Wednesday, while arrivals declined to 600 tonnes.

The Consumers Affairs Department will work with the State governments to identify whether hoarding was being done by traders (as opposed to farmers) and see what action could be taken against them.

Easing norms

While India allows import of onion at zero import duty, very little import takes place due to tough quarantine norms. It has been decided to ease these norms, especially those related to fumigation, to expedite imports. “While we don’t want to compromise on health and safety issues, we could ease norms by allowing fumigation after import into the country, instead of pre-shipping fumigation,” the official said.

NAFED, too, may import onion in addition to private traders. The shortage of onion in the market has been estimated at about 5 lakh tonnes, while domestic production for 2012-13 was estimated lower at 16.55 million tonnes.

amiti.sen@thehindu.co.in

vishwanath.kulkarni@thehindu.co.in

(This article was published on August 14, 2013)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.