March 24, Colombo (LNW): India, the world’s leading exporter of onions, has extended its ban on onion exports indefinitely, a decision that has surprised markets and is poised to escalate prices in various international markets, Reuters reported.
Initially imposed in December, the ban was scheduled to conclude on March 31. However, an official order issued late on Friday has extended the prohibition until further notice.
The extension comes despite a significant drop in local onion prices, which have decreased by more than half since the implementation of export restrictions.
Additionally, the ongoing harvest season has brought fresh supplies to the market, leading traders to anticipate the lifting of export limitations.
An executive from a Mumbai-based export firm, speaking on condition of anonymity, described the extension as surprising and unnecessary given the declining prices and increased supplies from the new crop season.
Prices in major onion-producing regions like Maharashtra have plummeted from 4,500 rupees per 100 kg in December to 1,200 rupees per 100 kg currently.
Prime Minister Narendra Modi’s government is entering an election season, with polls scheduled to take place over nearly seven weeks starting from April 19.
The decision to extend the export ban could have political implications as Modi seeks re-election for a third consecutive term.
The ban’s impact extends beyond India, affecting countries like Bangladesh, Malaysia, Nepal, and the United Arab Emirates, which heavily rely on Indian onion imports to meet domestic demand.
Consequently, these nations have grappled with soaring prices due to the restricted supply.
The ban has also created opportunities for competing exporters to capitalise on the market vacuum left by India.
With India typically offering shorter shipment times compared to rivals like China or Egypt, it accounts for more than half of all onion imports by Asian countries.
India’s onion exports reached a record 2.5 million metric tons in the financial year ending on March 31, 2023, underscoring its significance in global onion trade.
