New Delhi – The Central Government has officially withdrawn the 20 per cent export duty on onions, effective April 1, 2025, ending a months-long restriction aimed at stabilizing domestic availability and prices. The announcement was issued by the Department of Revenue following a recommendation from the Department of Consumer Affairs, according to an official statement released on Thursday.
The move comes after nearly five months of stringent controls on onion exports, which included export duties, minimum export prices (MEP), and even a temporary export ban. These measures, enforced from December 8, 2023, to May 3, 2024, were aimed at curbing outbound shipments and managing soaring prices in the domestic market during a period of high inflation and tight supply.
Export Duty Removed Amid Price Stabilization and Rabi Arrival
The decision to roll back the export duty is being viewed as a balancing act by the government, which seeks to ensure remunerative prices for farmers while keeping onions affordable for consumers. Officials cited the anticipated bumper arrival of the rabi crop as a key reason for lifting the duty.
According to the statement, onion prices at both mandis and retail levels have started softening. The all-India weighted average modal prices have dropped by 39 per cent, and retail prices have also fallen by 10 per cent over the past month, easing pressure on household budgets.
Increased arrivals in key onion markets such as Lasalgaon and Pimpalgaon have contributed to this downward trend. As of March 21, modal prices in Lasalgaon were at ₹1,330 per quintal, while Pimpalgaon recorded ₹1,325 per quintal — a reflection of improved supply dynamics.
Strong Export Trends Despite Curbs
Despite the imposition of multiple export restrictions, onion exports remained robust through the 2023–24 financial year. Total onion exports for the year reached 17.17 lakh metric tonnes (LMT). In the current fiscal year, up to March 18, 2025, exports have already hit 11.65 LMT.
Monthly exports also witnessed a steady climb, rising from 0.72 LMT in September 2024 to 1.85 LMT in January 2025. The resilience in export volumes underscores continued global demand and the competitiveness of Indian onions in international markets.
With the removal of the 20% duty, exporters expect improved margins and a potential surge in outbound shipments, particularly to key markets in the Middle East, Southeast Asia, and South Asia.
Rabi Onion Production Expected to Hit Record High
According to estimates from the Department of Agriculture & Farmers Welfare, rabi onion production is projected to reach 227 LMT, an 18 per cent increase from 192 LMT last year. Rabi onions constitute nearly 70–75 per cent of India’s total annual onion production, and their availability is critical in maintaining price stability through the non-harvest months before kharif onions are ready.
The robust rabi harvest is expected to stabilize market supply for the next several months and ensure that consumers are shielded from price volatility, which has often triggered inflationary concerns in the past.
Farmers, Exporters Welcome Policy Shift
The decision to lift the export duty has been broadly welcomed by farmer groups and exporters, many of whom had argued that extended restrictions were eroding profitability during peak harvesting season. With prices softening and rabi arrivals in full swing, stakeholders believe the move will allow for greater realization of export value without impacting domestic affordability.
“Farmers have suffered due to depressed mandi prices while exports were restricted. This move comes at the right time and will help stabilize farm incomes,” said an official from the National Horticulture Research and Development Foundation (NHRDF).
Exporters, too, are optimistic. Several onion traders have indicated plans to ramp up shipments to traditional buyers in Bangladesh, Sri Lanka, UAE, and Malaysia, where Indian onions are in high demand.
Government’s Dual Approach: Price Stability and Farmer Remuneration
The onion export policy over the last year has reflected the government’s tightrope walk between managing domestic food inflation and supporting farmer earnings. In 2023 and early 2024, onion prices rose sharply due to supply shortages, prompting export controls.
However, as rabi output surged and supply chains normalized, authorities began signaling a shift in approach — from control to enabling exports. This is evident in the gradual rollback of the MEP and now the complete withdrawal of the 20% export duty. Officials emphasized that the decision is part of a larger calibrated trade strategy that adapts to market conditions while ensuring adequate domestic availability.
Onion Price Outlook Remains Stable for Now
With the arrival of the rabi crop peaking and the export curbs being lifted, onion prices are expected to remain range-bound in the near term. Traders in Maharashtra, the largest onion-producing state, believe prices may fluctuate slightly due to logistical and storage-related factors but do not anticipate any steep rise.
Consumer prices, especially in urban areas, have shown signs of easing. In cities like Delhi, Mumbai, Hyderabad, and Kolkata, retail onion prices have dropped between ₹5 to ₹10 per kilogram over the past few weeks. However, any disruption in monsoon progress or sudden spike in global demand could alter the price trajectory, underscoring the need for continued monitoring.
Onion Policy Reflects Broader Agri-Export Strategy
The latest move on onions fits within the Centre’s broader strategy to align agricultural trade policies with both domestic food security and export competitiveness. India, as one of the largest onion producers and exporters globally, has often adjusted its trade stance based on internal supply dynamics.
Over the past year, similar adjustments have been made in the cases of wheat, sugar, and rice, where export bans or duties were introduced and later eased depending on production cycles and inflation data.
The government’s goal is to allow farmers to benefit from international price movements without destabilizing the domestic market, a challenging task in a politically sensitive commodity like onions.
The withdrawal of the 20 per cent export duty on onions marks a significant policy shift aimed at balancing farm-level profitability and consumer affordability. With rabi production set to hit a record high and prices showing signs of stability, the move is expected to benefit both onion growers and exporters. Going forward, market behavior will be closely watched to ensure that the gains from this policy adjustment are evenly distributed across the supply chain.
