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Malaysia, Sri-Lanka, Bangladesh Feel The Heat After India Banned Onion Exports

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Commonly used as a flavouring or side dish, onions are a staple food in many cuisines. Globally, 84,758,191 tons of onions are produced every year and India ranks second in the list of top producers of onions around the world.

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The Indian government in September banned exports of onions and imposed countrywide stock limits on the vegetable with immediate effect to bring down its prices following retail onion prices touching ₹80 in parts of the country due to supply disruptions after floods in some states.

The government had initially imposed a minimum export price of $850 per tonne on onions on 13 September, but consumer affairs secretary A.K. Srivastava complained to the commerce ministry that export are continuing unabated following which the DGFT banned exports.

India’s ban on export of onions due to soaring domestic price of the essential kitchen ingredient has become an irritant in bilateral trade relationship with its neighbours. India’s onion exports fell 10.7% to $154.5 million in April-July from a year ago.

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Malaysia, Bangladesh, Sri Lanka and the United Arab Emirates were the top importers of onion from India during this period.

Shorter shipment times than from rival exporters like China or Egypt play a crucial role in preserving the taste of the perishable commodity. Since India banned the export of onions, countries such as Bangladesh have turned to the likes of Myanmar, Egypt, Turkey and China to increase supplies in a bid to bring prices down.

India exported 2.2 million tonnes of fresh onions in the 2018-19 fiscal year ended March 31, according to data from India’s Agricultural and Processed Food Products Export Development Authority. That’s more than half of all imports by Asian countries, traders estimate.

Last month, Bangladesh Commerce Minister Tipu Munshi urged the government of India to lift the ban on onion export to neighbouring country. Munshi stated Bangladesh is heavily dependent on India for onion and is now importing from Turkey, Myanmar and Egypt to meet the requirement of onion in the country.

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“We are short of 6 lakh tonnes of onion annually and India provides 80 percent of this shortage. Presently we are cooking food without Onion.”

Munshi said that India stopped export of onion one and half month back without prior information and this has caused difficulties in Bangladesh. Onions now are being sold for a Record High Rs 220 in Bangladesh after India banned exports.

Bangladesh produced more than 2.33 million metric tons of onions from 2018-2019 (July-June); however, the market demand is 3.6 million metric tons. The country imports onions to cover this shortage from neighbouring India which produces almost one-fourth of the world’s onions.

Despite repeated requests from Bangladesh, India did not withdraw the ban and there is an indication that the ban may last a few more months.

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However, to worsen the situation, an Indian government official stated: “India may keep a ban on onion exports until February because domestic prices have risen after the harvest of summer-sown crops, which were expected to augment supplies, was delayed and damaged by untimely rains.”

“We will think about resuming exports once prices come down. Right now it is not possible,” a senior government official at the Indian Department of Consumer Affairs said on Monday.

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