India’s onion export ban hits neighbouring countries, steep price hikes reported

Dec 13, 2023 India Shipping News

NEW DELHI : The price of onions has skyrocketed in India’s neighbouring countries as India banned the export of the staple kitchen ingredient from Friday, December 8.

Markets in Bangladesh, Nepal, Bhutan, Sri Lanka and the Maldives have reported steep price hikes in wake of the ban till March 31, 2024 announced by the Directorate General of Foreign Trade (DGFT). 

India had introduced a minimum export price of $800 per tonne on onion exports on October 28 this year. The extension of the curbs on onion export in the form of a total ban has come three weeks ahead of the expiry of the earlier deadline. 

Bangladesh

Onion prices in Bangladesh experienced a significant spike, reaching Tk 200 per kilogram, a stark increase from Tk 130 in a single day. The surge is attributed to India’s decision to extend the ban on onion exports until March, a move aimed at controlling domestic supply.

The Trading Corporation of Bangladesh reported a notable escalation in local onion prices, rising from Tk 105-125 per kilogram a week ago to Tk 180-190. Imported onions also experienced a surge, increasing from Tk 90-110 to Tk 160-170.

Other than the export ban, retailers and wholesalers attributed the price surge to a crunch in domestic supply due to Cyclone Michaung.

However, market observers also noted that the restrictions on Indian onion’s import have been in place since October while questioning the abrupt surge and the rationale behind the nearly doubled prices. 

Bhutan

Onion prices in Bhutan also followed a similar pattern with prices reaching as high as Nu 150 per kilogram following India’s ban on onion exports. 

Residents in Thimphu, the country’s capital, said that the vegetable was being sold in the range of Nu 50-70 per kilogram earlier. Similar price hikes were reported in other parts of Bhutan with the price rising from Nu 70-80 per kilogram to Nu 100 after India’s announcement, a Bhutan Broadcasting Service (BBS) report said.

Indian officials also reportedly seized onions from eight trucks on route to Bhutan on Friday. 

Some vegetable vendors said the Indian customs officials at the border in Phuentshogling didn’t allow them to bring in the onions they had already paid for, unaware of the notice on the ban, BBS reported.

“We did not know anything about the notice on ban of export when we loaded the onions. We only knew about it when we reached Phuentsholing from Falakata and were stopped by the custom office. We were refused when we requested them to allow us to take the already loaded onions for which we already paid. We wouldn’t have paid for or bought the onions had we known about the notice. The Indian officials refused even when our customs official tried to request,” said Tshomo, a vegetable vendor.

“When we loaded the onions from India the day before yesterday, there was no notice on the ban. So when we reached the Indian customs office, we were stopped since the notice of the ban had been issued. We had to take out the onions and bear the loss. We would be grateful if our government [could] do something regarding the issue since we do not know what to do,” said Phuntsho Wangdi, another vegetable vendor.

Nepal

Nepal that relies almost entirely on India for its onion imports is also facing inflationary pressure in wake of India’s ban. In the last fiscal year, Nepal imported around 190 tonnes of onions worth Rs 6.75 billion from India

Onion prices in the country have surged, nearly doubling to Rs 200 per kilogram in retail, following India’s recent export restrictions. Traders anticipate further increases as Nepal heavily relies on imported onions. 

In November 2019, the price of onion hit an all-time high of Rs 250 per kg in Kathmandu after India banned onion exports in September that year. Many are now concerned about onion prices crossing this benchmark after India’s latest announcement.

Maldives

Maldivian economic minister Mohamed Saeed reassured the public that the country isn’t facing a disruption in the import of essential commodities in wake of India’s export cubs. 

Like Nepal, Maldives too is reliant on onion exports from India. Onion prices in the country have increased owing to a shortage in the local market.

Previously priced between MVR 200-MVR 350 per sack, onions are now being sold for MVR 500 in some places while MVR 800-MVR 900 in others, Avas reported. 

While India has made exemptions for some neighbouring countries, including the Maldives, the current onion stocks in the Maldivian market are sourced from Pakistan and China, the report said.

Sri Lanka

The price of onions has increased to nearly Rs 300/kilo in the local retail market.

A spokesperson for Sri Lanka’s Essential Food Commodities Importers and Traders Association told the Daily Mirror that importers were exploring alternative suppliers. “It is a perishable item. So, we place orders for weekly shipments. It is challenging for us to look to different markets because prices are very expensive,” he said.