Minister calls for report on local onion production as India imposes export duty

In the aftermath of India deciding to impose a 40 percent export duty on onions, Minister of Agriculture Mahinda Amaraweera called for an immediate report regarding the cultivation of big onions in Sri Lanka from the Department of Agriculture.

The Minister pointed out that onion cultivation in Sri Lanka has failed during the past few years though it has been a success for a long time.

The Ministry said the annual requirement of onions is 300,000 metric tonnes but Sri Lanka’s annual import of onions has been 131,795 metric tonnes per year during the given period.

It was reported that India will impose with immediate effect a 40% export duty on onions up to December 31 in an attempt to improve domestic availability of the vegetable, the Ministry of Finance said in a notification on Saturday.

The duty imposed by the world's biggest exporter of onions will help New Delhi dampen local prices ahead of key state elections later this year but will force Asian buyers to shell out more, as other regional exporters have limited supplies.

"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," said Ajit Shah, an exporter based in Mumbai.

Average wholesale onion price in key markets has jumped nearly 20% from July to August, to 2,400 rupees ($28.87) per 100 kg on concerns that erratic rainfall would lead to lower yields.

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, pointed out two agency reports while quoting weather department officials.