Govt Scraps Minimum Export Price Thresholds On Onion, Basmati Rice

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New Delhi: The government on Friday scrapped the minimum price thresholds for onion and basmati rice to boost outbound shipments and enhance farmers' income. The government also halved export duty on onion to 20 per cent from 40 per cent. The duty cut is effective from September 14.

The 40 per cent export duty had been in place since May 4. The decisions, including removal of the Minimum Export Price (MEP) on both onion and basmati rice and cut in the export duty, came ahead of assembly elections in Maharashtra and Haryana.

Haryana along with Punjab is the major producer of basmati rice. According to a communication from the Department of Commerce, the USD 950 per tonne minimum export price on basmati rice has been removed.

Commerce and Industry Minister Piyush Goyal said the move will help boost exports and increase farmers' income. "It has been decided to remove the current minimum export price (MEP) of USD 950 MT for issuing Registration-cum-Allocation Certificates (RCAC) for export of Basmati Rice," the communication said.

The APEDA (agricultural and processed food products export development authority) has been requested to take immediate action to implement the decision and it will also closely monitor export contracts for any non-realistic prices for basmati exports.

In October 2023, the government reduced the floor price for basmati rice exports to USD 950 per tonne from USD 1,200 per tonne amid concerns that higher prices were hurting outward shipments.

The government on August 27, 2023 decided not to allow exports of basmati rice below USD 1,200 per tonne to restrict possible "illegal" shipment of white non-basmati rice in the garb of premium basmati rice.

India's total exports of basmati rice stood at USD 5.9 billion in 2023-24. During the 2022-23 fiscal, basmati rice exports stood at USD 4.8 billion in terms of price, while in volume terms it was at 45.6 lakh tonnes.

As per the Foreign Trade Policy, APEDA is mandated to register all contracts for the export of basmati rice and issue the registration-cum-allocation certificate for the export of basmati rice.

The basmati crop is grown in kharif (summer-sown) season. In another farmer-friendly decision ahead of the assembly election in Maharashtra, the directorate general of foreign trade (DGFT) removed the MEP on onion with immediate effect.

In May this year, the government lifted the ban on onion exports but had imposed a USD 550 per tonne as the minimum export price (MEP), which essentially meant farmers could not sell their produce overseas at lower than this rate.

"The Minimum Export Price (MEP) condition on export of onions is removed with immediate effect and until further orders," the DGFT said. India exported 2.6 lakh tonnes of onions till July of this fiscal year. The country had exported 16.07 lakh tonnes of onions in the last fiscal.

The decision to remove the MEP on onion has been taken despite high retail prices of this key kitchen item. According to the data compiled by the Department of Consumer Affairs, the All-India average price of onion on Friday was Rs 50.83 per kg, while the modal price was Rs 50 per kg. The maximum price of onion was Rs 83 per kg and the lowest was Rs 28 per kg.

On September 5, the Centre began the first phase of retail sales of onion at a subsidised rate of Rs 35 per kg to provide relief to Delhi-NCR and Mumbai consumers from rising prices of the kitchen staple. NCCF and NAFED, which are maintaining a buffer stock of 4.7 lakh tonnes of onion on behalf of the government, have started retail sales through their stores and mobile vans.

Last week, Consumer Affairs Secretary Nidhi Khare noted that the outlook for onion availability and prices in coming months remains positive as the kharif (summer) sown area has increased sharply to 2.9 lakh hectares till last month against 1.94 lakh hectares in the year-ago period.

Further, about 38 lakh tonnes of onion are reported to be still in storage with farmers and traders, she had said. Meanwhile, the Centre has tightened wheat stock holding limits for traders, wholesalers, big chain retailers, and processors in order to check price rise and hoarding.

The revised stock limits on wheat came barely two months after they were imposed on June 24. The restrictions will remain in force until March 31, 2025 across all states and Union Territories.