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With prices in the domestic market picking up, Finance Ministry on Saturday decided to impose an export duty of 40 per cent on onion with immediate effect. This step aims to discourage export and increase supply in domestic market.
Forty per cent duty will be applicable till December 31, 2023.
Tomatoes, Onion and Potatoes (TOP) have a significant share in the vegetable basket for calculation of retail inflation based on Consumer Price Index (CPI) and retail food inflation based on the Consumer Food Price Index (CFPI). Due to a sharp increase in vegetable prices, retail inflation surged to a 14-month high of 7.44 per cent in July, while food inflation jumped to 39 months high of 11.5 per cent.
Deep dive into inflation data shows inflation for onion was in the negative zone for the first five months of the calendar year 2023, but then it moved into the positive zone and recorded 11.7 per cent in July. Keeping this in mind, government initiated many steps and imposing the export duty is one of them.
Earlier, the Consumer Affairs Department decided to commence the release of stocks from the onion buffer of 3 lakh metric tonne created this year. This was decided in the meeting chaired by Consumer Affairs Secretary. Rohit Kumar Singh with the Managing Directors of NAFED and NCCF on August 10. It was decided to release the onion stocks by targeting key markets in states or regions where retail prices are ruling above the all-India average and where the rate of increase in prices over the previous month and year are above the threshold level.
The Ministry said procurement for buffer could be enhanced further, if the situation demands. The two central nodal agencies, viz., NAFED and NCCF, had procured 1.50 lakh metric tonnes each of rabi onion during June and July from Maharashtra and Madhya Pradesh. This year, irradiation of onion had also been taken up on a pilot basis in collaboration with Bhabha Atomic Research Centre (BARC) to minimise storage loss. About 1,000 mt had been irradiated and stored in controlled atmosphere storage.
The Government has been maintaining onion buffer under the Price Stabilisation Fund to check the volatility in onion prices. The annual buffers have been built by procuring onions from the rabi harvest for release in major consumption centres during the lean season. The onion buffer size has been tripled in the past four years, from 1 lakh metric tonnes in 2020-21 to 3 lakh metric tonnes in 2023-24. The onion buffer has played a key role in ensuring the availability of onion to consumers at affordable prices and in maintaining price stability, added the Ministry.
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