Indian onion exports struggle as rivals undercut prices

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Indian onion exporters face challenges in the global market due to competitive pricing from Pakistan and China, as per industry insights. With international buyers accustomed to sourcing onions from other countries following Indian export restrictions, the dynamic has shifted.

Ajit Shah, President of the Horticulture Produce Exporters Association (HPEA), noted the pricing disparity: “Pakistan is offering onions at $170 a tonne cost and freight (CNF), Sri Lanka, while Indian onions are quoted at $330 CNF.” Another industry figure, M Madan Prakash, Director of Rajathi Group, highlighted, “There is no demand for Indian onions. Arrivals of Pakistan onions continue in the global market.”

Despite concerns over the quality of Pakistani onions, Shah confirmed their viability in the market, partly due to their production increase and favorable currency fluctuations. The Pakistani rupee’s exchange rate compared to the U.S. dollar provides an edge over the Indian rupee.

“In addition to these developments, the new arrival of Chinese onion is available at $250,” Shah stated, drawing attention to the competitive market dynamics further intensified by Iran, Egypt, and recent geopolitical tensions affecting Gulf supplies.

Onion export dynamics in India have been impacted by government interventions. A 40% export duty was imposed on August 19, 2023, later replaced by a $800/tonne minimum export price (MEP), and eventually culminated in a total ban starting December 8, 2023. The government made selective arrangements for exports based on foreign requests.

By May 2024, the ban was lifted, and subsequent adjustments included a reduced MEP and export duties. These measures aimed to stabilize a domestic market that saw production rise by 6.5 million tonnes year-on-year.

India’s onion prices saw pressure due to increased domestic production, with figures showing 30.77 million tonnes in the 2024-25 period. In contrast, lower exports had an effect on price stability within local markets, aided by measures from farmers and organizations like the National Agricultural Marketing Cooperative Federation (Nafed) to manage stocks and stabilize supply.

The ongoing discussions between Nafed and onion farmers aim at securing stock procurement under the price stabilization scheme. The dynamics of the market suggest that, aside from exporters, stakeholders, including farmers, consumers, and government bodies, express contentment with the current market stability.

Source: The Hindu Businessline

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