New Delhi: The government on Friday removed minimum price thresholds for onion and basmati rice in a bid to boost overseas shipments and improve farmers’ incomes. The government also halved the export duty on onion from 40 percent to 20 percent. The duty reduction will come into effect on September 14.
The 40 per cent export duty had been in effect since May 4. The decisions, including scrapping the Minimum Export Price (MEP) for both onion and basmati rice and cutting export duty, were taken ahead of assembly elections in Maharashtra and Haryana.
Haryana, along with Punjab, is the largest producer of basmati rice. According to a statement from the Department of Commerce, the minimum export price of $950 per tonne for basmati rice has been removed.
Commerce and Industry Minister Piyush Goyal said the move will help boost exports and increase farmers’ income. “It has been decided to do away with the existing minimum export price (MEP) of USD 950 MT for issuance of registration and allocation certificates (RCAC) for export of basmati rice,” the statement said.
APEDA (Agricultural and Processed Food Products Export Development Authority) has been asked to take immediate steps to implement the decision and will also closely monitor export contracts to detect unrealistic prices for basmati exports.
In October 2023, the government reduced the minimum export price for basmati rice to USD 950 per tonne from USD 1,200 per tonne amid concerns that higher prices were hurting overseas shipments.
On August 27, 2023, the Government decided not to allow exports of basmati rice below $1,200 per tonne to restrict possible “illegal” shipment of non-basmati white rice disguised as premium basmati rice.
India’s total basmati rice exports stood at $5.9 billion in 2023-24. During the fiscal year 2022-23, basmati rice exports stood at $4.8 billion in price terms while in volume terms they were 45.6 lakh tonnes.
As per the Foreign Trade Policy, APEDA is mandated to register all contracts for export of basmati rice and issue certificate of registration and allotment for export of basmati rice.
Basmati cultivation is done in the kharif season (summer sowing). In another farmer-friendly decision ahead of the Maharashtra Assembly elections, the Directorate General of Foreign Trade (DGFT) has scrapped the European Commission’s proposal on onion with immediate effect.
In May this year, the government lifted the ban on onion exports but imposed a minimum export price (MEP) of $550 per tonne, which essentially meant that farmers could not sell their produce abroad at a price below that rate.
“The condition of minimum export price (MEP) for export of onions is removed with immediate effect and till further orders,” the DGFT said. India exported 2.6 lakh tonnes of onions till July this fiscal year. The country had exported 16.07 lakh tonnes of onions in the last fiscal year.
The decision to remove the tax on onion has been taken despite the high retail prices of this kitchen staple. According to data compiled by the Department of Consumer Affairs, the average price of onion across India on Friday was Rs 50.83 per kg, while the modal price was Rs 50 per kg. The maximum price of onion was Rs 83 per kg and the lowest was Rs 28 per kg.
On September 5, the Centre started the first phase of retail sales of onion at a subsidised rate of Rs 35 per kg to provide relief to consumers in Delhi-NCR and Mumbai from rising prices of the kitchen staple. NCCF and NAFED, which maintain a stock of 4.7 lakh tonnes of onion on behalf of the government, have started retail sales through their shops and mobile vans.
Last week, Consumer Affairs Secretary Nidhi Khare said the outlook for onion availability and prices in the coming months remains positive as the area sown in kharif (summer) season has increased sharply to 2.9 lakh hectares till last month from 1.94 lakh hectares in the same period last year.
Besides, around 38 lakh tonnes of onions are reported to be still stored in the hands of farmers and traders, he said. Meanwhile, the Centre has tightened wheat stock holding limits for traders, wholesalers, large retail chains and processors in order to check price rise and hoarding.
The revised wheat stock limits were put in place barely two months after they were imposed on June 24. The restrictions will remain in place till March 31, 2025, in all states and Union Territories.
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