India exempts Bangladesh from onion export ban, to ship 50,000 tonnes before Eid

The annual demand for onion in Bangladesh is about 2.5 million tonnes (mt). The country produces around 2.3-2.4 mt and the rest is imported.
The annual demand for onion in Bangladesh is about 2.5 million tonnes (mt). The country produces around 2.3-2.4 mt and the rest is imported.

Summary

India imposed a ban on onion exports last December amid concerns over domestic production shortfall caused by irregular rainfall, pushing prices up. The ban is in place until the end of the ongoing financial year.

India will export 50,000 tonnes of onions to Bangladesh ahead of Eid, three senior officials aware of the development said. 

The proposed supplies to India’s long-standing partner in the neighbourhood come in the backdrop of India banning exports of onions in December after the imposition of a 40% export duty and a floor price of $800 per tonne failed to bring down domestic prices.

This also comes at a time when India’s close ally Bangladesh’s Prime Minister Sheikh Hasina was sworn in for a fifth term in January.

“We have allowed exports of 50,000 tonnes of onions to Bangladesh. The shipments will be undertaken by private trade until 31 March and the modalities are being worked out," consumer affairs secretary Rohit Kumar Singh told Mint.

India imposed a ban on onion exports last December amid concerns over domestic production shortfall caused by irregular rainfall, pushing prices up. The ban is in place until the end of the ongoing financial year.

The decision was taken after the ministry of external affairs (MEA) apprised that Bangladesh requested through Indian embassies for exemption from India’s prevailing prohibition on the export of food items, including onion and sugar, according to the second official who did not want to be named. 

While the MEA recommended that an exemption to export 20,000 tonnes of onions and 50,000 tonnes of sugar may be granted for Bangladesh, the government did not permit exports of sugar amid domestic supply concerns. However, on Thursday, the Centre decided to supply 50,000 tonnes of onions given Ramadan is scheduled between 10 March and 8 April, the official informed. Ramadan is a month-long religious festival that culminates in the important holiday of Eid-ul-Fitr, which is also celebrated in Bangladesh. 

Demand for onions typically rises during Ramadan. Citizens of Bangladesh consume about 500,000 tonnes of onions with numerous dishes for Iftar. The annual demand for onion in Bangladesh is about 2.5 million tonnes (mt). The country produces around 2.3-2.4 mt and the rest is imported. 

It imported 723,643 tonnes of onion from India alone during April-December of FY24. India in FY23 supplied a total of 671,125 tonnes of the kitchen staple to Bangladesh. India, the second-largest onion grower worldwide, exported nearly 1.7 mt of the horticulture crop to the world in FY24 until the ban was imposed in December and 2.5 mt of onion in FY23, data from the consumer affairs ministry showed.

The top importers of Indian onion are Bangladesh, the United Arab Emirates, Malaysia, Sri Lanka and Nepal.

As an exception, the Indian government also permitted onion exports to three other countries, Mauritius (1,200 tonnes), Bahrain (3,000 tonnes) and Bhutan (560 tonnes) with immediate effect, Singh informed.

“Though the National Cooperative Exports Ltd of the cooperation ministry is likely to facilitate the export, ultimately Indian traders will export the quantity," the third official said, requesting anonymity. 

Regarding the likelihood of the export permission putting pressure on domestic prices, the official said, “If the quantity was exported in one go, it would definitely have hurt prices. Since the exports will take place over more than a month, prices are unlikely to go up. However, we will allow shipments depending on daily supplies in key mandis so that there’s no pressure in the domestic market."

On export ban removal, the official informed that the ban may not be lifted immediately after 31 March this year. “The onion export ban has hit farmers as we have seen prices remain low. One thing that we must incorporate into our import/export policy approach is whenever you ban exports of any agricultural commodities from India, we need to understand which region will be hit. In my view, a compensatory package must be given to growers of the particular commodity from that region," said Devinder Sharma, a food and trade policy analyst.

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