India allows export of onions lying in transit to all countries including Bangladesh

Indian authorities on Friday allowed the movement of onion supplies already contracted for by Bangladeshi importers after Dhaka formally complained about the impact of New Delhi's ban on exports of the commodity.

Scores of trucks carrying onions destined for Bangladesh had been stopped at border crossings in West Bengal after the Directorate General of Foreign Trade (DGFT) banned all exports of the item on Monday following a shortage and sudden increase in prices in the domestic market.

As prices spiked in Bangladesh after the ban, the foreign ministry in Dhaka formally complained to the Indian high commission through a note verbale or unsigned diplomatic correspondence on Tuesday, people familiar with developments said. The matter was also raised by the Bangladeshi mission in New Delhi, the people said on condition of anonymity.

Foreign secretary Harsh Shringla, who made a previously unannounced visit to Bangladesh on August 18 to put bilateral ties back on track after they were hit by a string of irritants, took personal interest in the issue and was involved in efforts to find a solution, the people said. This had also been the first visit abroad amid the Covid-9 pandemic by Shringla, who was India's envoy to Dhaka during 2016-19.

Following a meeting on Friday between officials of the commerce and external affairs ministries, the DGFT gave the go ahead for export of eligible consignments of onions "with the approval of competent authority", the people said.

"The shipment of all onion supplies that were contracted for by Bangladeshi importers before the ban came into effect will be allowed," one of the people cited above said, adding the decision was due to the special relations with Bangladesh.

However, a decision is yet to be made on whether to allow more onion exports in future.

This is the second time in less than a year that an Indian ban on onion exports has had an impact on Bangladesh and triggered a formal reaction from Dhaka. Bangladesh Prime Minister Sheikh Hasina formally raised the earlier ban during a visit to New Delhi last October and had jokingly told a public gathering that she had asked her cook to prepare her food without onions. She had also said the Indian side should give advance notice of such bans.

The note verbale from Bangladesh's foreign ministry expressed "deep concern" at the Indian ban as it "directly impacts the supply of essential food items in the Bangladesh market". It noted that at a meeting of the commerce secretaries of the two sides during January 15-16, the "Bangladesh side requested the Indian side to consider not imposing export restriction on essential food items required by Bangladesh, and in case of any event necessitating such a restriction, it was requested that Bangladesh side be informed ahead of time".

The latest ban, the note verbale said, "undermines the discussions that took place in 2019 and 2020 between the two friendly countries on the matter and understanding shared". Bangladesh called on India to resume onion exports in view of the "excellent ties of friendship and understanding enjoyed by the two countries".

The Bangladeshi side is concerned as the sudden ban triggered panic buying by the public and hoarding by unscrupulous traders, who bought available onion stocks and then artificially drove up prices, the people said. They pointed out the matter had caused embarrassment for the Sheikh Hasina government, with its opponents raising questions about the benefits derived from better ties with India.

Bangladesh is largely able to meet its annual requirement of about 2.5 million tonnes of onions from domestic production but imports from India make up almost 90% of the shortfall. As it did last year, Bangladesh may turn to Turkey and Egypt to make up for the deficit in supplies.

Foreign policy commentator Maya Mirchandani, who closely tracks the neighbourhood, said there could be domestic compulsions such as a shortage for the ban on onion exports but such moves need to done in a more calibrated manner.

"While restricting exports, we should at least meet existing export commitments and then take care of future exports on a need-based approach. If we pride ourselves on a neighbourhood first policy, we should ensure there are no ruffled feathers with crucial neighbours such as Bangladesh," she said.