Japan, US object to India’s frequent bans on onion exports

In FY20, India even imported onions worth $80 million from Afghanistan, Turkey and Egypt to cool prices.

The US and Japan have raised questions on India’s frequent ban on onion exports at the World Trade Organization (WTO), claiming that such prohibitions without prior notification put importing countries in a difficult position. This, in turn, has resulted in Maharashtra onion growers demanding that the Centre draft a comprehensive policy on the import and export of onion, instead of taking ad hoc decisions.

Both US and Japan have asked India to clarify its actions and give reasons why it has not opted for an export quota, which would allow a certain number of exports. At the meeting of WTO’s committee on agriculture last month both countries said India was requested to explain its onion exports prohibition. The sudden export ban had also drawn protests from onion farmers as well as neighbouring countries such as Bangladesh and Nepal that also depend heavily on Indian onions.

Bangladesh Prime Minister Sheikh Hasina raised this issue at a business forum meeting in Delhi. The minutes of the WTO meeting on agriculture held in June contains details of the questions posed by Japan where India was requested to explain export prohibition on all varieties of onion and why the notification was not made before the measure was taken. India was also asked to explain how the country has given due consideration to the effects of the measure on importing member’s food security

In September, the government banned exports of all varieties of onions, anticipating a shortfall as exports shot up 30% in the April-July period. In October 2020, the commerce ministry partially eased the curbs, allowing exports of Bangalore rose onions and Krishnapuram onions up to 10,000 tonnes each with immediate effect. From 1 January 2021, the government lifted all restrictions on onion exports as prices starting to ease in the domestic market after the arrival of the new crop.

In FY20, India even imported onions worth $80 million from Afghanistan, Turkey and Egypt to cool prices. In FY21, India exported $378 million worth of onions, 15% higher than the previous year. The top exporting destinations were Bangladesh ($101 million), Malaysia ($62 million), the United Arab Emirates ($44 million) and Sri Lanka ($42 million).

Bharat Dighole, president of Maharashtra State Onion Growers Association, pointed out that although India was the second-largest onion producing country, there was no concrete onion export policy. “Onion growers have suffered heavy losses due to the government’s erratic ban on onion exports. Now with the issue raised in WTO, the central government must decide on a concrete export and import policy,” he said supporting the demand made by the US and Japan India should opt for an export quota which would continue the export of the bulb crop.

Ajit Shah, president of the Horticulture Produce Exporters Association (HPEA), said that countries such as Pakistan, Turkey and Egypt had gained a foothold in the international market because of India’s ad-hoc export policies. There has been no export of onions from September 2020 to January this year and the government has banned exports at least 4–6-times in the last couple of years, he said.

“In the past buyers never stopped to check international prices because India’s prices were considered a benchmark the world over. But now, buyers have started checking prices with other exporting nations as well. India has lost its foothold in the international market,” Shah said. The four-month ban on shipments, coupled with the decline in demand due to the pandemic, has also lowered India’s onion export revenue to its lowest level in six years during the 2020-21 fiscal year. Last year’s sales volume recovered from the previous year, recording 14% growth, but exports earnings fell by about 9% to Rs 2,107 crore from a high of Rs 4,651 crore in 2016-17.