Explained: Why Did Centre Lift Ban On Onions Export Ahead Of Voting In Key Maharashtra Seats?

Amidst mounting fury from farmers, particularly in Maharashtra, the central government on Saturday lifted the onion export ban imposed last December. This decision, coming just before key elections in Maharashtra where onion-producing farmers wield considerable influence, could impact the electoral prospects of the NDA.

Maharashtra's Onion Industry

The western state of Maharashtra stands as the primary onion-producing region in India. Annually, farmers from Maharashtra export approximately 10 lakh tonnes of onions to various countries including Malaysia, Singapore, Sri Lanka, Bangladesh, Pakistan, Indonesia, the US, the UK, Vietnam, Germany, and Gulf countries. The revenue generated from these exports typically ranges between Rs 1000 to 2000 crores in foreign currency. Nashik and its surrounding areas, forming the onion belt of Maharashtra, contribute around 80% of the state's onion exports, accounting for roughly 50% of the nation's total onion exports, thereby bringing prosperity to the region and its farmers.

Besides Nashik, other districts such as Ahmednagar, Pune, Solapur, and Aurangabad also host a significant presence of onion-producing farmers. However, the farmers in these regions were seething with discontent against the central government, particularly ahead of the crucial Lok Sabha elections. Their anger stemmed from the center's decision to impose the onion export ban in December 2023 and the subsequent allowance of onion exports from Gujarat, despite the ban persisting for Maharashtra farmers.

The imposition of the export embargo on onions, crucial for the region's economic sustenance, had thrown farmers and residents into a state of turmoil. Onions have historically wielded significant importance in Indian political discourse, with their price fluctuations often influencing voter sentiment. By permitting the export of 2,000 tonnes of onions from neighboring Gujarat, the center only added fuel to the fire, risking its electoral prospects.

The saga of the onion export ban

Amidst soaring domestic onion prices in the latter half of 2023, the center initiated damage control measures. Initially, in October 2023, it decided to release buffer onion stocks at subsidized rates of ₹25 per kg in retail markets to alleviate consumer distress. Subsequently, on October 28, the government imposed a minimum export price (MEP) of $800 per tonne on onion exports, effective until December 31, 2023, in an attempt to curb rising prices.

However, come December 2023, the Directorate General of Foreign Trade (DGFT), an arm of the Ministry of Commerce and Industry, announced a complete ban on onion exports, leaving Maharashtra onion farmers incensed. Since then, it had been an uphill battle for the onion farmers, who had produced 22.7 million tonnes of onions during the 2023 Rabi season. The export embargo faced repeated extensions, with the most recent indefinite extension being declared on March 31, 2024.

The resentment among Maharashtra onion farmers escalated when the center permitted onion exports to friendly nations on a case-by-case basis, despite the ban. It had authorized the export of 64,400 tonnes of onions to the UAE and Bangladesh through the National Cooperative Exports Ltd (NCEL). In line with this approach, on Thursday, the Union government partially relaxed the indefinite ban on onion exports once again, allowing for the "immediate" export of 2,000 tonnes of white onions, primarily grown in Gujarat, from three designated ports.

This decision did not sit well with Maharashtra onion farmers, who had borne the brunt of the ban. Protests erupted across the onion belt, with farmers' bodies either threatening to boycott elections or vote against the BJP-led NDA.

Assessing the onion export ban's impact

On the day the ban was lifted, a video featuring a Maharashtra farmer was going viral on social media, explaining the magnitude of the problem. In the video, the farmer elucidated the significance of onions and how the export ban had affected their livelihood and sustenance.

"An export duty of 40% was imposed on onions sold at Rs 45 per kg, implying that the government was receiving Rs 18 for every kg of onion. Despite this, they imposed an export ban. Within just three days of the ban, onion prices plummeted to Rs 12-15 per kg. Farmers incurred a loss of Rs 30 per kg of onion," the farmer lamented in the viral video.

"Considering a sack weighing 55 kg, the average farmer incurred a loss of Rs 1,650 per sack. Assuming an acre of farmland produces at least 200 sacks of onions, the export ban translated to a loss of Rs 3.30 lakh per acre for the farmer," he added.

"Moreover, in my town alone, where onion crops are cultivated across 200 acres, and assuming 200 sacks of onions per acre, the ban resulted in a staggering loss of Rs 6.60 crore," he concluded.

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When examining the sheer magnitude of losses and its impact on farmers, it becomes evident that the onion export ban was a significant issue in Maharashtra. Persisting with the ban would have signaled the center's indifference towards the substantial losses incurred by onion farmers. Furthermore, allowing exports from neighboring Gujarat would have further agitated the already disgruntled farmers, potentially fueling anti-BJP and anti-NDA sentiments ahead of the polls. The BJP, understandably, was unwilling to jeopardize its electoral prospects in a critical state like Maharashtra. Therefore, the decision to lift the onion export ban appears to be more of an electoral maneuver to placate the farmers.Open in app