Government of India might impose Minimum Export Price on onions to curb price rise

As onion prices witnessed a sudden spurt over the past week, the government has threatened to re-impose the minimum export price (MEP) on the commodity to improve domestic supply if traders try to hoard the edible bulbs to exploit the situation.

Apprehending a potential fallout of the price rise of the politically-sensitive commodity, the government also capped its retail price at Rs 23.90/kg for sales through the outlets of Safal, a unit of state-backed Mother Dairy.

Retail prices of onions have shot up by 18% in just five days in Delhi, the country’s largest trading hub, according to the data available with the consumer affairs ministry. Onion is currently selling at Rs 33/kg in Delhi, Rs 30 in Mumbai, Rs 35 in Kolkata and Rs 27 in Chennai, the data show.

The MEP system was removed in February 2018. Subsequently, incentives given under Merchandise Exports from India Scheme (MEIS) was also doubled to 10 per cent to boost outbound shipment as domestic prices fell.

“The government will consider strict action against hoarding and profiteering activities and evaluate the need for imposing a minimum export price on onion if the situation so demands,” an official statement said.

Parts of major onion producing states, including Maharashtra and Karnataka, have been affected by floods, raising fears of disruption of supplies.

The Centre will continue to offload onion from the official reserves to Safal without changing the sale price. The government has asked Mother Dairy, the largest retail chain of fresh fruits and vegetables in Delhi, to double the quantity of onion from its current level.

In addition, the government has also decided to offer onions from the buffer stock to large retailers at cost price for supplies to the public at reasonable prices. Cooperatives like NAFED and NCCF, who were also present in the meeting, have been directed to retail onions at prices similar to that of Safal through their outlets and mobile vans. The government had bought about 50,000 tonne onions in June under buffer stock scheme when prices were around Rs 6 per kg in Maharashtra mandis.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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