Onion exports to Sri Lanka, Bangladesh slow down on payment crisis and higher levies

Onion exports to Sri Lanka and Bangladesh have slowed down due to the current financial crisis in Sri Lanka and measures taken by the Bangladesh government to encourage local production in addition to imposing a tax on imported onions, reports Financial Express.

Exporters from Nashik, the country’s largest onion growing belt, claim that exports to Sri Lanka have reduced due to a delay in payments. The island nation is in the grip of its most painful economic downturn since independence in 1948, with severe shortages of essential goods and regular blackouts.

Bangladesh is the biggest importer of onions from India, followed by Sri Lanka.

Exporters said total exports to Sri Lanka and Bangladesh have dropped from 4,000-5,000 tonnes per week to 1,500 tonnes a week. Many exporters to Sri Lanka have not received payment for consignments sent in December 2021. The payment window has increased from 15-20 days to two-three months due to the currency crisis in the country. Exporters fear that if the government does not take immediate action, it will face serious consequences.

Bangladesh, meanwhile, is encouraging local cultivation of onion and has also imposed an import tax of around 2.80 taka per kg. This step was taken after frequent export bans by the Indian government led a rise in onion prices in the local Bangladesh markets, he said. Bangladesh needs to import 0.8-1 million tonne of onions every year, a majority of which is imported from India.

India exported 15.88 lakh tonnes in the 2017-18 season, 21.82 lakh tonnes in the 2018-19 season, 18.49 lakh tonnes in 2019-20 and 15.75 lakh tonnes in 2020-21.  In FY21, India exported $ 378 million worth of onions, 15% higher than the previous year.

The top exporting destinations are Bangladesh ($ 101 million), Malaysia ($ 62 million), the United Arab Emirates ($ 44 million) and Sri Lanka ($ 42 million). India’s onion production is estimated to increase by 16.81% to 31.12 million tonnes in the crop year beginning July 2022 on likely increase in acreage. The country had harvested 26.64 million tonnes of onion in the 2021-22 crop year (July-June).

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