Written by Talent KAS

Related Topics: Crops in India, Export Policy


  • Government has prohibited onion exports until further notice and imposed limits on the stocks that can be held to prevent hoarding in the light of skyrocketing prices.
  • According to the notification from the Director-General of Foreign Trade (DGFT), the export policy of onions is amended from “free to prohibited till further orders”.

Government Decisions

  • Central Government has imposed stock limits on onion traders.
  • Government has banned export of onions with immediate effect till further orders.
  • State Governments have been asked to enforce the stock limits strictly and carry out anti-hoarding operations against the unscrupulous traders by organizing raids, etc.
  • A Central buffer of about 56,700 MT was built by the Government through NAFED during Rabi 2019 season.
  • States have been asked to utilise this buffer and indicate their demand for the same to Department of Consumer Affairs and/or NAFED.

Why the Centre has initiated these actions?

  • The recent ban aims to tame prices of onion, which have doubled in the domestic retail market since July, 2019.
  • It will facilitate release of stocks in the market and prevention of hoarding by traders.
  • The decision to ban exports is expected to improve domestic availability of onion.

Impact on Traders

  • Retail traders across the country will now be able to stock only up to 100 quintals of onion while wholesale traders will be allowed to stock up to 500 quintals.
  • In the past, the Centre had authorised states to impose stock limits but this time it has imposed the limits on its own.

Way Forward

  • A ban is an irrational and sub-optimal solution.
  • Instead, efforts should be channelized into investing in scientific storage and processing facilities that will help augment supplies during a crisis.
  • There is a need to promote modern cold storages and develop a system similar to that of the warehouse receipt system for farmers.
  • Encouraging imports, not banning exports, is the remedy to augment supplies.
  • More policy making and political attention should be devoted to raising onion output and farm output in general, for that matter.
  • State Governments must launch a concerted intelligence drive to crack down on hoarders and bring the stocks to the market swiftly.

[Source: The Hindu, PIB, Economic Times]

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Talent KAS

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