Government of India Imposes 40% Duty on Onion Exports to Stabilize Domestic Prices
New Delhi, August 21, 2023 – In a bid to address escalating onion prices and enhance supplies within the domestic market, the Government of India has introduced a 40 percent duty on onion exports. Concurrently, the Narendra Modi administration has unveiled plans to distribute onions at subsidized rates commencing on Monday. Under this initiative, onions will be offered to customers at a subsidized rate of Rs 25 per kilogram through retail outlets and mobile vans. The distribution will be facilitated by the National Cooperative Consumer Federation of India Limited (NCCF).
NCCF’s Expanded Role: From Tomatoes to Onions
The NCCF, already engaged in selling tomatoes at subsidized rates under the government’s auspices, has been entrusted with the responsibility of retailing buffer onions. This strategic move is aimed at ensuring better availability of essential commodities to consumers.
According to the Ministry of Consumer Affairs, Food and Public Distribution, “The Government of India has augmented the onion buffer quantity to 5.00 Lakh Metric Tonnes this year, subsequent to accomplishing the initial procurement target of 3.00 Lakh Metric Tonnes. In alignment with this, the Department of Consumer Affairs has directed NCCF and NAFED to procure 1.00 Lakh Tonnes each, in order to achieve the supplementary procurement goal, while also ensuring judicious disposal of the acquired stocks in key consumption centers.”
Quantitative Shift in Buffer Stock and Distribution Strategy
The Government of India has raised the onion buffer to a substantial 5.00 lakh metric tonnes for the current fiscal year. This figure marks an increase of two lakh metric tonnes from the initially stipulated target of three lakh tonnes. In line with this augmentation, the Department of Consumer Affairs has issued directives to the NCCF and NAFED (National Agricultural Cooperative Marketing Federation of India Ltd.) to individually procure one lakh tonnes each, thereby bolstering the buffer stock.
The announcement was made via a tweet from ANI (@ANI) on August 20, 2023, highlighting the strategic emphasis on expanding the buffer stock.
Rollout of Subsidized Onion Sales
Notably, the NCCF’s Managing Director, Anees Joseph, shared insights into the rollout plan. He stated, “Our initial focus will encompass the retail sale of buffer stock onions within Delhi. The subsidized rate of Rs 25 per kilogram will be maintained, and we intend to distribute through both mobile vans and two retail outlets.” Joseph indicated that around ten mobile vans will be dispatched to the national capital on Monday, with gradual expansion of coverage to additional areas.
Digital Commerce and Geographical Targeting
Beyond physical distribution, NCCF is actively exploring avenues to sell onions online via the ONDC (Open Network for Digital Commerce) platform. The government’s intervention strategies will initially concentrate on markets in Delhi, Andhra Pradesh, Telangana, Himachal Pradesh, and Assam. These states have been identified as key areas for market intervention, utilizing the buffer stock to stabilize onion prices in both wholesale and retail domains.
Dual Pricing in Wholesale and Retail
Joseph explained the pricing strategy, highlighting that buffer onions will be retailed at the wholesale market rate in mandis, while a concessional rate of Rs 25 per kilogram will be maintained in retail markets. The distribution process will commence in Delhi from Monday, followed by the remaining four states two days later.
Retail Price Fluctuations
Recent official data underscores the fluctuations in onion prices. Nationally, the retail price of onions has witnessed a year-on-year increase of 19 percent, reaching Rs 29.73 per kilogram on Sunday. This marks a notable rise from the Rs 25 per kilogram recorded on the same day in the previous fiscal year. In the capital city of Delhi, the retail price is even higher, standing at Rs 37 per kilogram compared to Rs 28 per kilogram on the corresponding day in the prior year.
In conclusion, the Government of India’s proactive measures, including the imposition of export duties and the subsidy-backed distribution of buffer onions, signify a concerted effort to alleviate onion price volatility and ensure equitable availability for consumers. The augmented buffer stock and strategic distribution channels managed by NCCF reflect the administration’s commitment to stabilizing essential food prices in the face of market dynamics.