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”.
- 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.
- 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]