India (Common Wealth) _ The Indian government has announced that a 40% export levy on onions will be imposed with immediate effect until December 31, in an effort to increase domestic availability of the vegetable.
The tax on onions, on the other hand, will have a negative impact on Sri Lanka, whose economy is slowly improving, because the majority of its most important product is imported.
The levy imposed by the world’s largest onion exporter will help New Delhi lower domestic costs ahead of important state elections later this year, but it will force Asian consumers to pay more because other regional exporters have limited supplies.
The export tariff will raise the price of Indian onions relative to those from Pakistan, China, and Egypt. This will naturally result in lesser exports and help to cut local prices, according to Mr Ajit Shah, an exporter headquartered in Mumbai.
The average wholesale onion price in key marketplaces increased about 20% from July to August, to 2,400 rupees (S$39) per 100 kg, on fears of decreased yields due to irregular weather.
Annual retail inflation in India increased rapidly to a 15-month high of 7.44 percent in July, up from 4.87 percent the previous month. Onions harvested during the summer months decay quickly, causing new supply to be delayed. According to another Mumbai-based exporter, the government has taken preventive measures as a result of the situation.
Food inflation, which accounts for over half of total consumer price inflation, reached 11.51 percent. Retail food inflation was the highest it had been since January 2020. Bangladesh, Nepal, Malaysia, the United Arab Emirates, and Sri Lanka rely on Indian supplies.
Onions are the foundation of classic Asian foods such as biryani in Pakistan and India, belacan in Malaysia, and fish curry in Bangladesh. Onions harvested during the summer months decay quickly, causing new supply to be delayed. According to another Mumbai-based exporter, the government has taken preventive measures as a result of the situation.
Food inflation, which accounts for over half of total consumer price inflation, reached 11.51 percent. Retail food inflation was the highest it had been since January 2020. Onions are the foundation of classic Asian foods such as biryani in Pakistan and India, belacan in Malaysia, and fish curry in Bangladesh.
According to the second exporter, the Indian tariff would cause China and Pakistan to boost their prices because they have a limited excess for exports. Some of the most often used vegetables in Indian homes, such as tomatoes, onions, peas, brinjal, garlic, and ginger, have more than quadrupled in price in recent months.
According to two weather department officials, India is on track for its driest August in more than a century, with meager rainfall expected to persist across wide areas, owing in part to the El Nino weather pattern.
August rainfall, which is forecast to be the lowest since records began in 1901, could reduce yields of summer-sown crops ranging from rice to soybeans, raising prices and total food inflation, which reached its highest level since January.
Last month, India startled shoppers by prohibiting the sale of popularly consumed non-basmati white rice in order to slow price increases. Following India’s decision to levy a 40% export duty on onions, Minister of Agriculture Mahinda Amaraweera requested an immediate report from the Department of Agriculture on the production of large onions in Sri Lanka.
The Minister stated that onion cultivation in Sri Lanka has failed in recent years, despite being a long-standing success. The Ministry stated that the yearly requirement for onions is 300,000 metric tonnes, whereas Sri Lanka’s annual import of onions during the provided time was 131,795 metric tonnes.
The Indian government placed a 40% export duty on onions till December 31 in an effort to increase domestic availability, according to a notification issued by the Ministry of Finance on Saturday. The levy imposed by the world’s largest onion exporter will help New Delhi lower domestic costs ahead of important state elections later this year, but it will force Asian consumers to pay more because other regional exporters have limited supplies.
The average wholesale onion price in key marketplaces increased about 20% from July to August, to 2,400 rupees ($28.87) per 100 kg, on fears of decreased yields due to irregular weather.
According to two agency reports citing weather department officials, India is on track for its driest August in more than a century, with meager rainfall expected to linger across wide areas, owing in part to the El Nio weather pattern.
