Government Withdraws 20% Export Duty on Onions to Support Farmers

Starting April 1, the Indian government has lifted the 20% export duty on onions. This move aims to protect the interests of onion farmers, particularly after the significant drop in onion prices across major producing states.

Impact of Increased Rabi Crop Supply on Onion Prices

Due to the increased arrival of the Rabi crop, onion prices have dropped in key markets. In Maharashtra, Lasalgaon and Pimpalgaon, two of Asia’s largest wholesale onion markets, the price fell to Rs 1,330 per quintal and Rs 1,325 per quintal respectively as of March 21. The ministry reported that the all-India weighted average model prices decreased by 39% last month, while retail prices dropped by 10%.

Why the Decision Will Help Farmers

The removal of the export duty will ensure that onion prices do not fall significantly, helping farmers secure better prices for their produce. Experts believe this decision will not affect consumers in the short term, as the market currently has an abundant supply of onions. There is little to no chance of a price increase due to the high supply.

Expecting a Bumper Onion Harvest

The Ministry of Agriculture has projected a bumper Rabi onion crop this year, estimating production at 227 lakh tonnes, an 18% increase from last year’s 192 lakh tonnes. This forecast supports the decision to remove the export duty, ensuring a stable price for both farmers and consumers. The government’s announcement came after receiving input from the Department of Consumer Affairs and the Revenue Department.

Exports and the Kharif Crop Arrival

Despite the removal of the export duty, onion exports have been strong. As of March 18, exports reached 11.65 lakh tonnes for the current financial year, with monthly exports rising from 0.72 lakh tonnes in September 2024 to 1.85 lakh tonnes in January 2025.

The arrival of the Kharif crop in October-November will further stabilize the onion market, with Rabi onions accounting for 70-75% of India’s total onion production. The government had previously imposed export restrictions and a 20% export duty to ensure domestic supply, but this has now been reversed.