Government of India removes minimum export price for onions and basmati rice

By Dhirendra Kumar

The Government of India has removed the minimum export price (MEP) on onions and basmati rice with immediate effect, according to an order issued on Friday by the commerce ministry.

The move comes ahead of assembly elections in Maharashtra, a major onion-growing state, likely to be held in November. The removal of MEP might see a surge in exports.

The government had lifted the ban on onion exports in May 2024 but imposed an MEP of $550 per tonne. The MEP on basmati rice was imposed on 25 August 2023, at $1,200 per tonne, which was reduced to $950 per tonne in October last year.

MEP is a regulatory threshold set by the government to control the lowest price at which goods can be exported. It aims to prevent excessive exports, stabilize domestic prices, and ensure adequate local supply by discouraging exports when domestic prices are high.

The move was taken to restrict ″illegal shipments of white non-basmati rice.″ Its shipment was banned in July last year.

As of 31 July this year, India had exported 260,000 tonnes of onions in the 2024-25 financial year. This follows exports of 171,700 tonnes in the previous fiscal year.

India is a major exporter of onions, earning significant revenue from these exports. The net export value was ₹3,326.99 crore in 2021-22, ₹4,525.91 crore in 2022-23 and ₹3,513.22 crore in 2023-24, according to the government data.

In the domestic market, the government has been selling onions at a discounted price of ₹35/ per kg as the retail price surged to ₹70 per kg.

Commenting on the decision, onion farmer Bajirao Gagare said, ″It will definitely escalate domestic prices. There isn’t enough stock to support increased exports.″

″Though the decision to remove the MEP on onions appears to be influenced by the upcoming assembly elections in Maharashtra, it may not significantly benefit the state's farmers, who are currently receiving better prices domestically,″ said Vikram Gaikwad, an onion farmer in Ahmednagar district, Maharashtra.

″If the government genuinely aimed to support onion farmers, action would have been more impactful during periods when prices fell below ₹10 per kg,″ Gaikwad said.

Regarding basmati rice, the commerce ministry stated that the minimum price would be immediately removed, but the prices of basmati will continue to be monitored.

In a letter to the Agricultural and Processed Food Products Export Development Authority (Apeda), the ministry said, ″The undersigned is directed to refer to this department’s letter dated October 25, 2023, on the above-mentioned subject and to inform that it has been decided to remove the current Minimum Export Price (MEP) of USD 950 per MT for issuing registration-cum-allocation certificates (RCAC) for the export of basmati rice.″

″It is requested that APEDA take immediate action to implement the above. However, APEDA will closely monitor export contracts for any non-realistic prices for basmati exports,″ the order read.

India is the leading exporter of basmati rice to the global market. India exported 5.2 million tonnes of basmati rice, worth $5.84 billion in FY24.

India’s rice exports during FY24 dipped 6.5% to $10.42 billion from $11.14 billion in the previous fiscal year, primarily due to a fall in shipments of non-basmati rice, which was affected by the export ban imposed in July 2023.

India imposed a ban on the export of non-basmati white rice on 20 July 2023, to ensure sufficient domestic supplies and control rising food inflation. A ban on the export of broken rice has also been in place since September 2022.