Onion Export ban reversed: India to Resume Onion Exports from March 2020

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Exporting Onions from India | Euro Exim Bank

India’s Directorate General of Foreign Trade has announced that the country will resume the export of onions from 15 March 2020.

This decision has been made on the basis of the strong onion harvest that has been recorded in the country in recent months. This bumper harvest is also likely to ensure that the prices of onions in the domestic market will come down

The Original Ban

Before the original ban was imposed in 2019, the country had exported onions worth $496.82 million during the year 2018–19

  • A majority of these exports were made to countries such as Sri Lanka, Bangladesh, and the UAE

India had stopped exporting onions in September 2019, after amending the export policy for the crop

  • The ban was imposed because significant amounts of the crop were destroyed during the Kharif season
  • In states like Maharashtra, the excess rains and floods had played an important role in destroying the crop

During the second half of 2019, onion export was moved from the “free” category of exports to the “prohibited” category

  • This decision had come on the back of high demand for onions in the local market and lower supply figures
  • The government had also set a minimum export price of $850 per tonne

In order to meet the high local demand at the time, India had resorted to importing of onions from other countries such as Egypt, Afghanistan, and Turkey

The New Policy

  • The bumper rabi crop has meant that the shortage fears have been allayed and the country can now look to export again
  • The decision to reverse the ban has been made by the Indian government in consultation with the local farmers. The government believes that the new policy will help the farmers in increasing their income
  • Currently, onion prices in India have fallen from Rs 150 per kg to just Rs 60 per kg. This decline in price is indicative of the fact that domestic demand is now being fully met and there is a surplus that can be exported
  • Andhra Pradesh, Kerala, Telangana, Uttar Pradesh, and West Bengal were the four major states that relied on imported onions during the last six months. Now, the demand in these states is being met by the locally-produced onions, paving the way for exports
  • India’s export ban had also had a significant impact on other Asian markets such as Sri Lanka and Nepal. Most households in these markets had reduced their onion intake in order to account for the ban. The reversal of the ban is likely to make sure that these countries are able to procure onions at a cheaper rate than before
  • Finally, India’s decision to reverse the onion export ban can also ensure that the country’s agriculture exports are likely to get a timely boost.
  • India’s trade deficit has been widening in recent quarters, and an increase in the country’s agriculture sector exports is going to help the economy

Conclusion

Now that the ban has been reversed, exporters can look to begin trading in onions again. In order to do so, they could seek the help of international financial institutions.

Institutions such as Euro Exim Bank offer customized solutions in the form of financial instruments and related trade advisory services.

The bank offers solutions that can help Indian exporters in exporting onions to markets such as the UAE, Bangladesh, Nepal, and Sri Lanka

Euro Exim Bank offers financial instruments like Bank Guarantees and Letters of Credit (LCs). Further information about Euro Exim Bank and its offerings is available here.

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