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Government scraps minimum export price thresholds on onion, basmati rice
Sep-16-2024

In order to boost outbound shipments and enhance farmers' income, the government has scrapped the minimum price thresholds for onion and basmati rice. The decision to remove the Minimum Export Price (MEP) on both onion and basmati rice comes ahead of assembly elections in Maharashtra and Haryana. Haryana along with Punjab is the major producer of basmati rice. The $950 per tonnes minimum export price on basmati rice has been removed. The APEDA (agricultural and processed food products export development authority) has been requested to take immediate action to implement the decision and it will also closely monitor export contracts for any non-realistic prices for basmati exports. 

In October 2023, the government reduced the floor price for basmati rice exports to $950 per tonnes from $1,200 per tonnes amid concerns that higher prices were hurting outward shipments. The government on August 27, 2023 decided not to allow exports of basmati rice below $1,200 per tonnes to restrict possible ‘illegal’ shipment of white non-basmati rice in the garb of premium basmati rice. India's total exports of basmati rice stood at $5.9 billion in 2023-24. During the 2022-23 fiscal, basmati rice exports stood at $4.8 billion in terms of price, while in volume terms it was at 45.6 lakh tonnes. 

In another farmer-friendly decision ahead of the assembly election in Maharashtra, the directorate general of foreign trade (DGFT) removed the MEP on onion with immediate effect and until further orders. In May this year, the government lifted the ban on onion exports but had imposed a $550 per tonnes as the minimum export price, which essentially meant farmers could not sell their produce overseas at lower than this rate. However, 40 per cent export duty on onions is there. India exported 2.6 lakh tonnes of onions till July of this fiscal year. The country had exported 16.07 lakh tonnes of onions in the last fiscal. The decision to remove the MEP on onion has been taken despite high retail prices of this key kitchen item.

On September 5, the Centre began the first phase of retail sales of onion at a subsidised rate of Rs 35 per kg to provide relief to Delhi-NCR and Mumbai consumers from rising prices of the kitchen staple.  NCCF and NAFED, which are maintaining a buffer stock of 4.7 lakh tonnes of onion on behalf of the government, have started retail sales through their stores and mobile vans. Meanwhile, the Centre has tightened wheat stock holding limits for traders, wholesalers, big chain retailers, and processors in order to check price rise and hoarding. The revised stock limits on wheat came barely two months after they were imposed on June 24. The restrictions will remain in force until March 31, 2025 across all states and Union Territories.
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