India: Why have onion prices crashed in the past three weeks?

On December 8, the central government banned the export of onions till March 2024. This resulted in the onion prices crashing by more than 60% in less than three weeks. While explaining the rationale for banning the exports, the government said that it had considered the delay in the kharif arrival, and the quantity of onion exported. The quantity of onion exported remained strong right from July onwards not just because there was a global shortage of onions and the demand from the next-door neighbor Bangladesh was very high but also because of Indian export policies gone wrong. When the retail onion prices had imposed an export duty of 40% on August 19 without fixing a floor price on which to impose the duty, this loophole was exploited by traders who resorted to under-invoicing to pay lower duties and the export continued in large. volumes due to high global demand for Indian onions.After repeated requests from a section of trade, the government introduced a minimum export price ...