Import duties on onion abolished; exports banned

In a bid to cool the skyrocketing retail prices, government has abolished import duties on onion and banned its exports for an indefinite period even as wholesale prices started showing signs of decline.

However, the retail prices of the staple vegetable in markets across the country have not shown any change from yesterday's level of Rs70-80 a kg.

Agriculture secretary PK Basu expressed confidence that the retail prices would come down in seven to 10 days with the expected arrival of fresh crops.

Deputy chairman of planning commission Montek Singh Ahluwalia said the spike in onion prices was only a temporary phenomenon due to unseasonal rains.

"To counter the sudden and unexpected rise in prices of onions, the department of revenue has brought down customs duty and countervailing duty to zero," finance secretary Ashok Chawla told reporters in Delhi.

The government also notified the ban on export of all varieties of onion till further orders.

The steep hike in onion prices set alarm bells ringing in the government, which initially suspended export of ban till January 15, 2011 and later banned it till further oorders.

Onion imports hitherto attracted customs duty of 5% while counterveiling duty had been fixed at 4%. Countervailing duty is levied to protect domestic producers.

Abolition of import levies, Chawala said, would help in increasing supplies through imports.

On the possible sources of imports, the finance secretary said, "How much and from where...I can't say at this moment."

These steps come amid a sharp rise in the price of onions up to Rs70-85 per kg in retail markets across the country from just Rs35-40 a few days ago.

However, following the earlier decision to suspend exports, the wholesale prices had already started showing a dip.

While, the wholesale prices at the country's largest trading centre in Nashik dropped by upto 42%, the prices at the Azadpur Mandi in Delhi (Asia's largest fruit and vegetable market) came down by upto 29%.

In Laslgaon onion market yard in Nashik (Maharashtra), the wholesale price went down to Rs3,702 per quintal today as compared to Rs5,200 per quintal yesterday.

Similarly in Pimpalgaon in the same district, the wholesale prices dropped to Rs3,134 per quintal from Rs5,411 per quintal yesterday.

However, market experts said the effect of these measures could be seen on the retail prices only after a few days.