International Desk

In twin measures to incentivize onion exports, India has scrapped the minimum export price (MEP) for the commodity with immediate effect and slashed duty on the kitchen staple’s overseas shipment from 40 to 20 percent.

The decisions announced on Friday night were aimed at enhancing farmers' income, ahead of forthcoming assembly elections in Maharashtra state, the largest producer of the kitchen staple, where ruling Bharatiya Janata Party has high stakes.

The Directorate General of Foreign Trade (DGFT) announced the abolition of the MEP on onion with immediate effect.

In May this year, India withdrew the ban on onion exports but imposed a USD 550 per tonne as the minimum export price, which essentially meant farmers could not sell their produce overseas at lower than this rate.

"The Minimum Export Price (MEP) condition on export of onions is removed with immediate effect and until further orders," a DGFT notification said.

The decision to remove the MEP on onion has been taken despite high retail prices of this key kitchen item.

According to the data compiled by the Department of Consumer Affairs, the all-India average price of onion on Friday is Rs 50.83 per kg, while the modal price is Rs 50 per kg. The maximum price of onion is Rs 83 per kg and the lowest is Rs 28 per kg.

Last week, the Consumer Affairs Secretary Nidhi Khare noted that the outlook for onion availability and prices in coming months remains positive as the kharif (summer) sown area has increased sharply to 2.9 lakh hectares till last month against 1.94 lakh hectares in the year-ago period.

In a related measure, the Indian Finance Ministry on Friday night cut the duty on onion export to 20 percent from 40 percent. The duty cut will be effective from Saturday (today).

The 40 per cent export duty had been in place since May 4 after it was introduced to discourage export of onion to help bring down its price in the domestic market.

India exported 2.6 lakh tonnes of onions till July of this fiscal. The country had exported 16.07 lakh tonnes of onions in the last fiscal.