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India Extends Ban on Onion Exports Indefinitely, Impacting Overseas Markets

India, the world’s largest exporter of onions, has unexpectedly prolonged its ban on onion exports, a move that is poised to aggravate high prices in several overseas markets, particularly ahead of a general election.

Initially enforced in December, the ban on onion exports was slated to expire on March 31. Traders had anticipated a lift on the ban, given the significant decrease in local prices since the imposition of export restrictions and the influx of fresh supplies from this season’s crop.

However, late on Friday, the government issued an order announcing the extension of the ban until further notice, catching many by surprise.

Expressing bewilderment over the decision, an executive from a Mumbai-based export firm, preferring anonymity, stated, “The extension is surprising and completely unnecessary, considering the falling prices with rising supplies from the new season crop.”

Prices of onions in key wholesale markets in Maharashtra, the largest onion-producing state, have plummeted from 4,500 rupees per 100 kg in December to 1,200 rupees per 100 kg, as reported by the executive.

Prime Minister Narendra Modi, who is vying for a third consecutive term, faces upcoming elections scheduled over nearly seven weeks from April 19.

The ban’s ripple effects are already felt in countries like Bangladesh, Malaysia, Nepal, and the United Arab Emirates, which heavily rely on imports from India to meet domestic demands for onions. Many of these nations have grappled with soaring prices following the imposition of the ban.

Highlighting the repercussions, another executive from an export company based in Mumbai remarked, “India’s move is allowing rival exporters to quote much higher prices since buyers have no choice.”

Traders estimate that India, with its shorter shipment times compared to competitors like China or Egypt, accounts for over half of all onion imports by Asian countries.

In the fiscal year ending on March 31, 2023, India recorded a historic high of 2.5 million metric tons of onion exports, underlining its significant role in the global onion market.

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