ALBAWABA – The government on Saturday announced a new levy on onion exports in an attempt to protect local markets and curb rising food prices amid skyrocketing inflation in India, news agencies reported.
India has been struggling with the domestic availability and affordability of vegetables in recent months as tomato and onion prices rise to unprecedented heights.
In an effort to bridle skyrocketing inflation in India ahead of key elections, Prime Minister Narendra Modi’s government imposed a 40 percent levy on onion exports to protect local food prices.
A high tax on exports discourages farmers and exporters from selling the crop overseas and helps retain local supplies of the produce at relatively affordable prices, accounting for inflation.
"The export duty will make Indian onions more expensive than those from Pakistan, China, and Egypt. This will naturally lead to lower exports and aid in reducing local prices," Ajit Shah, an exporter based in Mumbai, told Reuters.
The export tax will be effective immediately and continue through the end of the year, according to a notification by the country’s finance ministry on Saturday.
Meanwhile, skyrocketing inflation in India has surged to a 15-month high, according to Bloomberg.
India's onion exports in the first half of 2023 jumped 63 percent from a year ago to 1.46 million metric tons, as reported by Reuters.
But India is heading for its driest August in more than a century, with scant rainfall likely to persist across large areas, partly because of the El Niño weather pattern, two weather department officials told Reuters on Friday.
Countries such as Bangladesh, Nepal, Malaysia, United Arab Emirates and Sri Lanka rely on Indian shipments, according to Reuters.
Notably, India is the world’s biggest onion exporter.
