BAN ON ONION EXPORTS

Related Topics: Crops in India, Export Policy

News

• 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]