Why has the government banned export of onions and will the ban bring down the prices?

The government on Monday, Sep 14, prohibited the export of all varieties of onion except those cut, sliced or in powder form.

In a notification, the Directorate General of Foreign Trade (DGFT) said, “The export of all varieties of onion is prohibited with immediate effect” The ban includes Bangalore rose onions and Krishnapuram onions.

According to Live Mint, India exported fresh onions worth $328 million and dried onions worth $112.3 million in FY20. Exports of onions shot up 158% to Bangladesh in the April-July period.

The country’s consumer or retail inflation in August rose 6.69%, slightly lower than 6.73% recorded in the previous month. According to the consumer price index data, food inflation in August fell marginally to 9.05%. Yet, overall food & beverages inflation rose to a high of 8.3% in August.

Also, There is shortage of onion in the domestic market due to heavy rainfall and floods and there has been a steady increase in wholesale prices of onions which has seen the kitchen staple becoming costlier in the urban markets.

As reported by Indian Express, Although a sharp depreciation in prices is expected to take place in view of the export ban, traders feel the prices are again going to rise in a week or so as the overall supplies will remain stressed.