Opportunities for Chinese Onion exporter as Indian's supply lowers

India's onion supply has been impacted by abnormal rainfall causing a bad harvest season, leading to higher prices in fall 2020. India is a major onion producer and consumer, which also supplies to the neighboring countries, Bangladesh and Nepal. In 2019, India exported $440 million USD worth of onions to overseas markets.

Due to the high price and low supply of the onion season in fall 2020, India's Ministry of Commerce and Industry announced to ban all export of onion with the exception of onion slices and onion powder on Sept. 14, 2020. As a result, the supply shortage has triggered price increases in neighboring South Asian countries, such as Bangladesh and Nepal.

The imposed ban has caused panic in Bangladesh as 95% of the country's onion imports are originated from India. The Bangladeshi government has also taken quick action in respond to the ban on Sept. 20 by temporarily removing the import tariff on onions, the policy will be in force until March 2021.

China as another major onion producer and exporter, with the production volume of more than 20 million tons annually, has taken up the great opportunities. Sources in Bangladesh have recently stated that the country still needs to import 600,000 tons of onions in the remaining months of 2020 to maintain the supply, and importers are expected to turn to alternative suppliers such as China, Myanmar, Afghanistan and Egypt. Last year, India’s ban on exports drove onion prices in Bangladesh to a record-high $3.54 per kilogram, causing consumer outcry throughout the country.