Onion Prices Crash To ₹5-8/Kg As Export Bans, Policy Hurdles Cripple Farmers

Nashik:  India’s onion market is currently facing an unprecedented collapse. In several parts of Maharashtra, farmers are being forced to sell onions at just ₹5 to ₹8 per kg, a rate far below the cost of cultivation. Despite abundant production, export restrictions and policy hurdles have choked the export pipeline.

In an exclusive interview with Vikas Singh, Vice President of the Horticulture Produce Exporters Association (HPEA), we examined the multiple challenges crippling the sector.

Q: How much has onion production increased, and what impact has it had?
According to Vikas Singh, government estimates place onion production this year at 30.7 million metric tonnes, while private agencies estimate 31.7 million metric tonnes—around 10% higher than usual.

However, despite this bumper crop, export bans and restrictions have forced massive volumes to remain within the domestic market, severely depressing prices.

Q: How has the export ban affected the industry?

Even though restrictions were eased in April, the 2023–24 export ban left long-term damage. During India’s absence from global markets, Pakistan and China filled the supply gap, capturing market share in countries that traditionally depended on Indian onions. Singh stressed that India urgently needs a stable, long-term export policy to avoid such setbacks.

Q: Is Bangladesh emerging as a competitor?
Bangladesh, India’s largest onion importer, is now nearly self-sufficient.
Last year, 40% of India’s 1.1 million metric tonnes of onion exports went to Bangladesh. But this year, Bangladesh issued import permits for only a few days, effectively shutting the largest market for Indian onions.
Bangladesh is also preparing to become a future onion-exporting nation, further shrinking India’s traditional customer base.

Q: What has been the impact on farmers?
Because of high production and export blocks, prices fell sharply.
Farmers who stored summer onions in April, hoping for better prices later, are now compelled to sell their stock at throwaway rates. The expectation of rising prices collapsed completely, leaving farmers in deep financial distress.

Q: Are NAFED and NCCF helping farmers?
According to Singh, NAFED—originally created to protect farmers—now functions more like a consumer-protection body. NAFED buys onions at ₹15–16 per kg in March–April, only to sell them later at ₹7–8 per kg, pulling market prices down further.

NAFED and NCCF together purchase only 3 lakh metric tonnes, which is barely 1% of India’s total production. Yet, even this small volume, when released at lower prices, pushes market rates further downward, harming farmers.

Q: What should the government do to boost exports?
Singh said exporters have long demanded that the RoDTEP incentive be increased from 1.9% to 4%. However, because three ministries are involved, the approval process is slow, and farmers ultimately pay the price for policy delays.

Q: Has the government taken any steps regarding RoDTEP?
Singh revealed that senior APEDA officials recently confirmed that a proposal to increase RoDTEP from 1.9% to 4% has been submitted to the concerned committee.

Q: What will production look like next season?
After incurring heavy losses this year, farmers are expected to reduce the area under onion cultivation next season.
This may eventually lead to shortages and price spikes in the future.

Expectations from the Government

A stakeholder committee should be established to frame a stable and consistent onion export policy.

NAFED should supply onions through ration shops (PDS) to stabilize demand and ensure fair prices for farmers.

A long-term export policy for onions must be implemented.

Export promotion measures should be strengthened.

New international markets must be explored to reduce dependence on a few countries.

New high-yield seed varieties should be developed to increase per-hectare productivity.