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Bangladesh depends heavily on Indian onions to meet its domestic demand. (AP )
Bangladesh depends heavily on Indian onions to meet its domestic demand. (AP )

The Bangladesh factor in India's onion export ban

  • While domestic onion prices remain stable, it is the spike in external demand for onions which seems to have triggered the ban on export of onions

NEW DELHI: Onion prices remain more or less stable at around 40 per kilogram in Delhi markets. In August, wholesale and retail prices of onion at all India level fell 34.5% and 4% respectively compared to last year’s level.

Then why did the government ban export of onions in a hurry when it has a stated policy to deregulate onions by amending the Essential Commodities Act for better price realization for farmers?

While domestic onion prices remain stable, it is the spike in external demand for onions which seems to have triggered the ban on export of onions. During April-June period, onion exports to Bangladesh, India’s largest overseas market for the key kitchen ingredient, shot up 147.5% to 1.9 lakh metric tonne. Overall, onion exports grew 23% during the same period to 6.8 lakh metric tonne.

Bangladesh depends heavily on Indian onions to meet its domestic demand. Last year on 29 September, when India banned export of onions, prices of onions shot up in Bangladesh and it became a point of friction between the two neighbouring countries. Learning from its experience and anticipating a ban on onion exports this year too, Bangladesh seems to have bumped up import of onions from India to restock its cold storages.

During her visit to India in October last year after the onion export ban, Bangladesh PM Sheikh Hasina had said "Pyaaz leke thoda sa dikkat ho gaya hamare liye. Mujhe maloom nahin hain, aapne kyun pyaaz band kardiya. Thoda notice dene se achcha hota hum dusre desh se la sakte the. Achanak band kardiya aur ye hamare liye mushqil ban gaya. (We are facing some issues because of the ban on onion exports from India. I don’t know why you banned export of onions. It would have been better if you had alerted us in advance so that we could have sourced onions from other countries. You banned it suddenly and it became a problem for us)." Hasina had said in jest that she had asked her cook not to use onions in the kitchen.

Restriction on onion exports has become an annual affair. Last year, the government imposed countrywide stock limits to bring down prices of onions that had soared ahead of state elections in Maharashtra and Haryana. This year’s upcoming state elections in Bihar and Madhya Pradesh may also have played a role in the export ban.

The crackdown had followed retail onion prices touching 80 a kg in Delhi due to supply disruptions after floods in some states. In December, prices hit 160 per kg in certain parts of the country. Five months after the ban, government lifted the curbs, starting 15 March, as the shortage in onion supply due to excess rain and flood hitting the kharif crop passed with arrival of rabi crop.

Indian farmers deserve a stable farm export policy for better price predictability.

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