Govt imposes $850/tonne MEP on onion to boost local supplies

The government on Thursday imposed a minimum export price (MEP) of $850 per tonne on onion to increase domestic supplies and check price rise.

What is MEP?

MEP is the minimum rate below which exports are not allowed.

Onion MEP was scrapped in December 2015. In a notification, the Directorate General of Foreign Trade (DGFT) said: "Export of onion...shall be permitted only on Letter of Credit (LC) subject to a MEP of $850 per tonne till December 31, 2017."

Export of all varieties of onions will be allowed only on LC, it added.

Concerned over the rise in onion prices, Consumer Affairs Minister Ram Vilas Paswan in August had sought that MEP be imposed on its exports by the commerce ministry.

He also sought the removal of sops on export of the kitchen staple. Retail onion prices, which have shot up to Rs 50-65 per kg in most cities, have come under pressure due to tight domestic supplies.

The government has asked state-run MMTC to import 2,000 tonnes of onion, while other agencies Nafed and SFAC to buy onions locally and supply in consuming areas.

Supplies got exhausted as large quantity of exports were undertaken in the first four months of the current fiscal.

The country exported 1.2 million tonnes in April-July of this fiscal, up by 56% from the year-ago period. Also, the new 2017-18 kharif crop - which is being harvested - is expected to be less owing to fall in acreage.

Recently, a senior consumer affairs ministry official had said that the new kharif crop is likely to be lower by 10% as area sown is 30% lower. About 40% of the country's total onion crop is produced in the kharif season, and the rest during the rabi season.

The kharif crop, however, cannot be stored. Maharashtra, Karnataka, Madhya Pradesh, Bihar and Gujarat are the major onion producing states.