Ban on onion exports seems to be prompting some novel ways of circumvention by exporters. In one such consignment, custom officials found onions being exported under the guise of tomatoes.

The Chairman of the Central Board of Indirect Taxes & Custom (CBIC), Sanjay Kumar Agrawal, reported that the Nagpur Customs Commissionerate has foiled an attempt to illegally export 82.93 MT of onions, which has been prohibited by the Government of India till March 2024. “To evade detection, the exporters had mis-declared goods as tomatoes,” he said in an official communication.

Explaining the mechanism, custom officials said that, in an effort to ensue faster clearance, 90 per cent consignments are cleared on the basis of self-certification and duty is paid on the basis of self-assessment. The remaining 10 per cent of consignments are selected for inspection based on the ‘risk profile’ of importers or exporters. There is a possibility that, by using facilitation measures, intentional mis-declaration might have occurred, one of the officials said.

In order to ensure adequate supply in the domestic market and price stability, the government initially imposed a customs duty at the rate of 40 per cent on onion exports. Then, On December 8, 2023, the government banned export of onions till March 31. This week, there was a strong buzz that the government is going to lift the ban. However, on Tuesday, Consumer Affairs Secretary Rohit Kumar Singh clarified that the ban would continue. Meanwhile, the export of onions to friendly countries is allowed on a case-to-case basis after approval from the inter-ministerial group.

According to sources, as on date, total production has been 253.81 lakh tons. In 2022-23, the total production was over 302 lakh tons. Various estimates suggest that annual demand of onion varies between 165-210 lakh tones. Considering the better quality, there is a strong demand for Indian onions globally. Bangladesh, Malaysia, UAE, Sri Lanka, and Indonesia are major importer countries of Indian onions.  

Onions are sown in all the States; however, Maharashtra is the leading producer with a share of around 43 per cent, followed by Madhya Pradesh (16 per cent), and Karnataka & Gujarat (around 9 per cent each). It is harvested thrice a year, with cropping seasons reported during Kharif, Late Kharif, and Rabi.

The harvest of Rabi is most important as it contributes nearly 72 -75 per cent of national production and is harvested during the months of March to May. The shelf life of Rabi harvest is highest and is store-worthy, whereas the Kharif and Late Kharif crop is for direct consumption and not store-worthy. The timing of the onion harvest across the country provides a regular supply of fresh/stored onions throughout the year. 

But sometimes, due to vagaries of weather, either the stored onion spoils or the sown area gets damaged, leading to supply constraints and a rise in domestic prices. To address such challenges, the Government of India has set up the Price Stabilization Fund for procurement and storage of onions as a buffer to keep the supply chain smooth during lean seasons.