In a surprising development ahead of an impending general election, India has decided to extend its ban on onion exports indefinitely. This unexpected move is expected to worsen already high prices in several international markets.
Originally scheduled to conclude on March 31, traders had anticipated the ban on onion exports to be lifted, especially considering the significant decrease in local prices by more than half since the implementation of export restrictions. Additionally, this season's crop has been yielding fresh supplies, further fueling expectations for the ban to be lifted.
Nevertheless, the government issued an order late on Friday, declaring that the ban will persist until further notice. An executive from a Mumbai-based export firm, said, The extension is surprising and completely unnecessary, considering the falling prices with rising supplies from the new season crop.
The executive noted that onion prices in certain wholesale markets in Maharashtra, the largest onion-producing state, have plummeted from 4,500 rupees to 1,200 rupees per 100 kg since December. This drastic drop reflects the significant fluctuations in the market. Notably, Prime Minister Narendra Modi is aiming for a record-equalling third consecutive term in the forthcoming elections, which are scheduled to span nearly seven weeks, commencing from April 19.
Countries such as Bangladesh, Malaysia, Nepal and the United Arab Emirates rely on imports from India to fill domestic gaps in onion supply and many of those nations have struggled with high prices since the ban. India's move is allowing rival exporters to quote much higher prices since buyers have no choice, said another executive at an export company based in Mumbai.