Indian onion exporters struggle as Bangladesh shifts policies, rivals gain ground

The heat of the crisis in Bangladesh is being felt by onion exporters of India, who are grappling with frequent changes in the policies being adopted by the two neighbours towards exports and imports.

- SHIKHA SALARIA

The staple vegetable, which has been playing a crucial role in India’s political economy, especially around elections, has been one of the sticking points in India-Bangladesh ties.

With India banning onion exports for about six months between December 2023 and May 2024, countries like Bangladesh, Sri Lanka and Saudi Arabia diversified their imports, and rivals like China and Pakistan gave Indian exporters major competition. Exporter associations have asked the government to continue the ban on the sale of Indian onion seeds to other countries, but exporters say the seeds continue to be smuggled out.

In a bid to ensure that onion prices did not surge ahead of the 2024 Lok Sabha elections, the government of India, in December 2023, banned exports of the vegetable but allowed shipments to other countries based on their demand. Measures such as the imposition of a minimum export price of USD 800 per tonne and export duty of up to 40 per cent on onion exports were introduced until December 31, 2023, in an effort to improve domestic availability.

The export ban was lifted on May 4, 2024, after the completion of two phases of the 2024 Lok Sabha elections, just before voting was scheduled in western Indian states, including Maharashtra — India’s biggest onion-producing state — where producers had been seeking that the ban be overturned to boost exports.

However, the prolonged ban led to irreversible damage to the prospects of Indian onion exporters, as countries like Bangladesh and Saudi Arabia, which were among the top importers of Indian onions, diversified their sourcing. India's rivals, China and Pakistan, capitalised on the country’s absence from the onion trade.