A four-month ban on shipments coupled with decline in demand due to the Covid pandemic pulled down onion export earnings to a six-year-low during the 2020-21 financial year. Though the volume rebounded last fiscal from the previous one, registering 14 per cent growth, exports earnings fell by about nine per cent to ₹2,107 crore.
From a high of ₹4,651 crore in 2016-17, onion export earnings have seen a steady decline, while volumes have also taken a beating. Exporters attribute the Government’s move to ban onion exports whenever the domestic prices rise for the declining trend in exports.
“From September last year to January this year, no onion export took place. For the last two years, the Government has been banning the exports for a minimum of four to six months,” said Ajit Shah, an exporter in Mumbai and President of the Horticulture Produce Exporters Association.
Pakistan exports
“When you stop exports, buyers will look out for alternative sources to secure their supplies. As a result, other onion exporters like Pakistan have gained. Pakistan, which earlier used to export onions for 1-2 months in a year, has now been shipping onions for 2-6 months in the past two-three years. They are even exporting now. Earlier, Pakistan never exported during the June-July period,” Shah said.
Lasalgaon (Nashik) based onion trader Nitin Jain said that exports this season were most affected by the government’s export policy. “Already there was less demand in the market because of the Covid-19 lockdowns. Inconsistent policy resulted in diversion of Indian onion buyers in international market to other country onion. Gulf and Bangladesh are major markets for Indian onion. And this season, Pakistani onion reached in the Gulf market in big number as there was uncertainty about our exports,” said Jain.
Disruption in supply chain
Further, Jain said that the disruption in supply chain to the international market largely affected exports. “We had Covid-19 problems, shortage of containers and inconsistent policy,” said Jain. He added that India needs a sustained policy with continuity of supply and rates to re-establish its onion market in other countries.
Further, the higher price of Indian onions also impacted shipments. Indian onions are expensive by at least $100 per tonne, Shah said. Also, the buyers of Indian onions in West Asia and the Far-East among other regions are also sourcing supplies from China, Turkey and Egypt. They have started comparing prices and trying to source cheap, Shah said.
As other producers such as Pakistan gain a foothold in India’s onion markets, exporters are finding it tough to regain their share. “Pakistan has started exporting in big quantities and their exchange is also helping the shipments,” Shah said.
Export policy
Further, due to effect of India’s switch-on and switch-off in export policy, some of the buyer countries have started growing more now trying to become self sufficient, Shah said. Bangladesh has been the largest buyer of Indian onions, followed by Malaysia and United Arab Emirates.
India’s onion production according to first advance estimates for 2020-21 is seen marginally higher at 26.29 million tonnes from the previous year’s final estimate of 26.09 million tonnes.