Japan, US object to India’s frequent bans on onion exports

The USA and Japan have strongly objected to India’s frequent ban on onion exports at the World Trade Organization (WTO), claiming that such prohibitions without prior notification put importing countries in a difficult position.

This, in turn, has prompted onion growers from Maharashtra to demand that the Centre draft a comprehensive policy on the import and export of onion instead of taking ad hoc decisions.

At the meeting of WTO’s committee on agriculture last month, the US and Japan requested India to clarify why it has not opted for an export quota, which would allow a certain amount of exports.

The sudden export ban had also drawn protests from onion farmers and neighbouring countries like Bangladesh and Nepal, which depend heavily on Indian onions. Bangladesh Prime Minister Sheikh Hasina had raised the issue at a business forum in Delhi.

In September 2020, the government banned exports of all varieties of onions, anticipating a shortfall as exports shot up 30% in the April-July period. In October 2020, the commerce ministry partially eased the curbs, allowing exports of Bangalore rose onions and Krishnapuram onions up to 10,000 tonne each. On January 1, the government lifted all restrictions on onion exports as prices starting to ease in the domestic market after the arrival of the new crop.

In FY20, India even imported onions worth $80 million from Afghanistan, Turkey and Egypt to cool prices. In FY21, India exported onions worth $378 million, 15% higher than the previous year. The top exporting destinations were Bangladesh ($101 million), Malaysia ($62 million), the United Arab Emirates ($44 million) and Sri Lanka ($42 million).

Bharat Dighole, president of the Maharashtra State Onion Growers Association, said that although India is the second largest onion producing country, there is no concrete onion export policy. “Onion growers have suffered heavy losses due to the government’s erratic ban on exports. Now with the issue raised in the WTO, the central government must decide on a concrete export and import policy,” he said, supporting the demand made by the US and Japan that India should opt for an export quota.

Ajit Shah, president of the Horticulture Produce Exporters Association, said countries such as Pakistan, Turkey and Egypt had gained a foothold in the international market because of India’s ad hoc export policies. There has been no export of onions from September 2020 to January this year and the government has banned exports four to six times in the last couple of years, he said.

“In the past, buyers never stopped to check international prices because India’s prices were considered a benchmark the world over. But now, buyers have started checking prices with other exporting nations as well. India has lost its foothold in the international market,” Shah said.

The four-month ban on shipments, coupled with the decline in demand due to the pandemic, has also lowered India’s onion export revenue to its lowest in six years in 2020-21. Last year’s sales volume recovered from the previous year, recording a growth of 14%, but export earnings fell by about 9% to `2,107 crore from a high of `4,651 crore in 2016-17.