India bans onion exports as prices stay elevated

A worker sorts onions at a wholesale vegetable market in Chandigarh, India - Reuters

MUMBAI (Reuters): India on Sunday banned exports of onions, a common ingredient in Indian cooking, as prices remain high due to a seasonal shortage which has been worsened by flooding in several states.

The government said exports will be prohibited with immediate effect.

In several cities prices of the vegetable have doubled in recent weeks, prompting the government of the world’s biggest onion exporter to take steps to calm prices ahead of key state elections later this year.

In June, India withdrew 10% export incentives on onions after prices started to rise due to dwindling supplies from last year’s harvest and a delay in planting of the summer-sown crop.

Excessive rainfall in the second half of the monsoon season has led to crop damage in several states and stocks held by traders are insufficient to meet demand until the new crop arrives at end-October. Earlier this month, the government also imposed a $850/tonne minimum export price (MEP) on onion shipments.

The government has also attempted to bring down prices by releasing more onions from federal buffer stocks, prices have remained fairly high.