India Withdraws Onion Export Duty

The Government of India announced the withdrawal of the 20 per cent duty on onion exports. This decision comes after a prolonged period of restrictions that began in December 2023. Farmers had been protesting against these restrictions due to financial losses. The lifting of the duty is set to take effect from April 1, 2025.

Background of Onion Export Restrictions

In December 2023, the Government of India banned onion exports to manage domestic supply shortages. This ban aimed to ensure that onions remained affordable for local consumers. Initially scheduled to be lifted by March 31, 2024, the ban was extended indefinitely, leading to widespread discontent among farmers.

Impact of the Export Duty

When the ban was eventually lifted in May 2024, a minimum export price of $550 per tonne was set, alongside a 40 per cent export duty. This was later reduced to 20 per cent in September 2024. Farmers argued that the export duty was unjustified, especially as crop yields increased in subsequent months.

Protests by Farmers

Farmers, particularly from Maharashtra, protested against the ongoing restrictions. They brought into light that the initial ban was unnecessary after the domestic supply stabilised. The protests intensified as farmers struggled to recover their production costs, which ranged from Rs 2,200 to Rs 2,500 per quintal.

Current Market Conditions

As of March 2025, the prices of onions in key markets like Lasalgaon and Pimpalgaon were Rs 1,330 and Rs 1,325 per quintal, respectively. Despite these prices being higher than in previous years, they were insufficient for farmers to cover their costs. The all-India weighted average modal prices saw a decline of 39 per cent, while retail prices dropped by 10 per cent over the past month.

Production Estimates

The Department of Agriculture and Farmers Welfare estimated a Rabi production of 22.7 million tonnes for the current year. This figure represents an 18 per cent increase from the previous year’s production of 19.2 million tonnes. Increased production may help alleviate some of the pressures on farmers in the coming months.

Government Response

The Government of India has acknowledged the situation. The Department of Revenue issued a notification on March 22, 2025, confirming the withdrawal of the export duty. This decision aims to support farmers and stabilise the onion market ahead of the Lok Sabha elections.

Future Outlook

With the export duty being lifted, farmers are hopeful for improved market conditions. The increase in onion arrivals in major markets may lead to better prices. However, farmers remain cautious about the sustainability of these changes.

Questions for UPSC:

1. Critically analyse the impact of export restrictions on domestic agriculture in India.
2. What are the implications of government policies on farmer protests? Provide suitable examples.
3. Explain the significance of onion production in Maharashtra’s economy and its global market.
4. Comment on the role of agricultural policies in ensuring food security in India. How are they influenced by political considerations?

Answer Hints:

1. Critically analyse the impact of export restrictions on domestic agriculture in India.

1. Export restrictions can lead to oversupply in domestic markets, causing prices to plummet.
2. Farmers face financial losses, as seen with onion farmers unable to recover production costs.
3. Such policies may disrupt market dynamics, discouraging farmers from investing in future crops.
4. Long-term restrictions can lead to a decline in agricultural productivity and innovation.
5. Export bans can erode farmers’ confidence in government support and policies, leading to protests.

2. What are the implications of government policies on farmer protests? Provide suitable examples.

1. Government policies directly influence farmers’ income and livelihood, triggering protests when they are unfavorable.
2. The ban on onion exports in December 2023 led to widespread protests due to financial distress among farmers.
3. Farmers argue that policies should reflect current market conditions, as seen in the protests against the extended ban.
4. Protests can pressure the government to reconsider policies, as demonstrated by the withdrawal of the export duty.
5. Long-term discontent can lead to political repercussions, especially during election cycles, influencing policy changes.

3. Explain the significance of onion production in Maharashtra’s economy and its global market.

1. Maharashtra is the largest onion producer in India, contributing to the state’s agricultural GDP.
2. Onion production supports millions of farmers, impacting rural employment and livelihoods in the region.
3. Globally, India is one of the largest exporters of onions, influencing international market prices and trade dynamics.
4. The state’s onion market, particularly in Lasalgaon, is a key hub for pricing benchmarks in the country.
5. Increased production can enhance Maharashtra’s economic resilience and food security, both domestically and globally.

4. Comment on the role of agricultural policies in ensuring food security in India. How are they influenced by political considerations?

1. Agricultural policies are crucial for maintaining food supply, pricing stability, and farmer welfare in India.
2. Policies like export restrictions are often implemented to manage domestic shortages but can have adverse effects.
3. Political considerations, such as upcoming elections, can drive policy changes to appease farmers and voters.
4. Effective agricultural policies should balance the needs of consumers and producers to ensure long-term food security.
5. Continuous dialogue between the government and farmers is essential to create responsive and sustainable agricultural policies.