Onion price goes up in Bangladesh after India extends export restrictions

The price of onions in Bangladesh has surged by Tk20-25 per kg after India announced an extension of onion export restrictions – minimum export price at $800 and 40% export duties – until 31 March next year.

India's decision, effective immediately, has been made to increase domestic availability and to keep prices in check, according to a notification issued by the Indian Ministry of Commerce and Industry on Thursday.

The notification outlines three conditions under which consignments of onions can be exported. These include shipments where loading has begun before the notification, cases where shipping bills have been filed and vessels are already berthed or anchored for loading, and consignments that have been handed over to customs or entered customs stations for exportation before the notification.

Retailers in Dhaka's Karwan Bazar attribute the price hike in local markets to a lack of adequate stock, with traders reportedly depleting their inventories due to concerns that India may reduce tariffs and remove conditions.

Ariful Islam, a wholesaler at Karwan Bazar, expressed the urgency of the situation, stating that the crisis is exacerbated by declining imports and empty stocks.

Talking to The Business Standard, Shahidul Islam, an onion importer at the Hili port, warned of potential consequences in Bangladesh if the import process from India is not simplified and tariffs are not reduced within the next two months.

He urged the government to take immediate action, including requesting India to withdraw tariffs and making arrangements to import onions from other countries. The stock of onions in Bangladesh is reportedly at a critical stage, and the government's intervention is seen as crucial to address the looming crisis.

This development follows the Revenue Department of the Indian Finance Ministry imposing a 40% duty on onion exports to Bangladesh on 20 August. Subsequently, the Indian government set a Minimum Export Price (MEP) of $800 per tonne, effective from 29 October, expiring on 31 December.

In May 2022, the Bangladeshi government halted onion imports from India to support local farmers, leading to a spike in onion prices. India's 2020 export ban on all onion varieties except cut, sliced, or in powder form was implemented to control rising domestic prices amid flood-related production losses.

The annual production of onions in Bangladesh exceeds 3.5 million tonnes, with a demand of around 2.8 million tonnes. Despite high production, the country relies on imports due to significant wastage caused by storage and management complications, amounting to 25% or more of the total onion production.