The commerce ministry issued an order on Friday saying the government has removed the minimum export price on onions and basmati rice with immediate effect.
The move comes ahead of assembly elections in Maharashtra, a major onion-growing state, which are likely to take place in November. Removal of MEP might see a surge in exports.
The government had unbanned onion exports in May 2024 but had imposed an MEP of $550 a tonne. Basmati rice was subject to an MEP of $1,200 a tonne on 25 August 2023. That was cut to $950 a tonne in October last year.
MEP is the minimum export price that the government fixes for controlling the minimum permissible export price of goods. It is in relation to preventing excessive exports, stabilizing domestic prices, and also ensuring adequate local supply by discouraging exports when the prevailing domestic prices are high.
The government move was taken to restrict "illegal shipments of white non-basmati rice." Its shipment was banned in July last year.
India had exported 260,000 tonnes of onions until 31 July this year in the 2024-25 financial year. The country exported 171,700 tonnes in the previous fiscal year.
This is also a major foreign exchange earner for India. Net export value was ₹3,326.99 crore in 2021-22, ₹4,525.91 crore in 2022-23 and ₹3,513.22 crore in 2023-24, the government data revealed.
India has been selling onions at a discounted price of ₹35 per kg in the domestic market after the retail price shot up to ₹70 per kg.
Onion farmer Bajirao Gagare said, "It will definitely escalate domestic prices. There isn't enough stock to support increased exports.".
"While the order to exempt onion from MEP seems to be politically motivated by the assembly elections in Maharashtra, it could do little for the farmers of the state as they are receiving appropriate prices in the domestic market" said Vikram Gaikwad, an onion farmer from Ahmednagar district of Maharashtra.
"If the government was seriously interested in helping the onion farmers, it would have done something more when prices touched ₹10 a kilogram during certain periods, Gaikwad said. The commerce minister stated that the minimum support price imposed on basmati rice would immediately be withdrawn, but the prices of basmati would continue to remain under observation.
In a letter to the Agricultural and Processed Food Products Export Development Authority, the ministry said, "The undersigned is directed to refer to this department's letter dated October 25, 2023, on the above-mentioned subject and to inform that it has been decided to remove the current Minimum Export Price (MEP) of USD 950 per MT for issuing registration-cum-allocation certificates (RCAC) for the export of basmati rice.".
"It is requested that APEDA take immediate action to implement the above. However, APEDA will closely monitor export contracts for any non-realistic prices for basmati exports," the order read.
India is the largest exporter of basmati rice in the international market. India exported 5.2 million tonnes of basmati rice valued at $5.84 billion in FY24.
India's rice exports during FY24 fell by 6.5% to $10.42 billion compared to $11.14 billion in the previous fiscal year, largely because of a decline in shipments of non-basmati rice, including basmati and other varieties of long-grain paddy, following an export ban put in place in July 2023.
The government of India completely banned the export of all non-basmati white rice on 20 July 2023 to ensure adequate supplies in the country and to check the rising inflation in food. The government had already banned the export of broken rice since September 2022.
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