In an effort to curb the rising prices of onions, the government has initiated a 40% duty on onion exports effective immediately until December 31. This move comes as a response to the continued increase in onion prices during this month, with predictions of further escalation in September.

Notably, the prices of tomatoes have also exhibited a recent rise in August. Although more recent data indicates some moderation in rates, the Reserve Bank of India (RBI) highlighted that the average prices have still increased. Onion and potato prices have also seen a sequential increase, as outlined in the recent bulletin by the RBI.

To address the situation, on August 11, the central government began releasing onion from its buffer stock. For the 2023-24 season, the government intends to maintain a buffer stock of 3 lakh tonnes of onions, compared to the 2.51 lakh tonnes maintained during the previous year.

Buffer stock serves the purpose of meeting unexpected needs and stabilizing prices during times of lean supply. The Secretary of the Food and Public Distribution Department, Rohit Kumar Singh, convened a meeting to discuss the modalities of disposal with the Managing Directors of key agricultural marketing agencies.

During this meeting, it was decided to release the onion stocks in markets where retail prices surpass the national average, and where the rate of price increase is above the threshold level. The disposal process will involve e-auctions and retail sales on e-commerce platforms, providing a strategic approach to address the price surge.

Rabi onions, harvested from April to June, account for a significant portion of India’s onion production, meeting consumer demand until the kharif crop is harvested in October-November. Typically, the procured stocks are distributed through targeted open market sales and are supplied to states, Union Territories, and government agencies for retail outlets during periods of low supply.

By implementing this 40% duty on onion exports, the government aims to mitigate the impact of rising onion prices and maintain price stability in the market.

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