NEW DELHI: Owing to lower production and rising prices, the government on Tuesday withdrew 10 per cent incentive paid to onion exporters. The tuber’s prices have jumped 47 per cent in a month.
The Directorate General of Foreign Trade (DGFT), in a notice, announced the removal of incentives paid out for export of fresh and chilled onions under the Merchandise Exports from India Scheme.
“Export benefits for exports of fresh and chilled onions granted under the foreign trade policy has been made zero from the current 10 per cent with immediate effect,” the DGFT notice said.
The decision to withdraw export incentives comes as the agriculture ministry has started work on creating a buffer stock of 50,000 tonnes of onion to check prices in the coming months.
India had actually doubled the export incentive last December, after a glut saw onion prices crashing, hitting farmers ahead of a crucial general election.
Onion, which is an indispensable ingredient in Indian cooking, is politically important.
High prices have often led to consumer protests and pollsters believe they played a major role in the electoral reverses suffered by ruling state governments in Delhi and Rajasthan in 1998 elections. Low prices have led to farmers’ discontent.
Wholesale prices of onion hovered around Rs 1,300 per quintal at Lasalgaon, near Nashik. Indian exporters mostly sell onion to Bangladesh, Nepal, Sri Lanka and Gulf countries.
Onion production in the current (2018-19) crop year is estimated to be slightly higher at 23.62 MT, against 23.26 MT in 2017-18, mainly on account of the winter glut.
But with low supplies spurring higher prices and drought fears in key onion producing districts, the government decided to take no chances.