India on Friday cut by $40 a tonne the minimum price at which onion can be exported from the country, aligning it with the fall in local prices and giving a thrust to exports.
The National Agricultural Cooperative Marketing Federation of India (NAFED), a government agency, had in February raised the minimum export price (MEP) by about 30 percent across regions, to discourage exports amid surging local prices.
"Now, arrivals have improved and prices have fallen across the country. So, we decided to reduce the minimum export price," a senior NAFED official said from New Delhi.
The new export prices, to come into effect on Sunday, differ from region to region. For instance, the MEP to the Middle East, a major buyer, would be $305, compared with $345 until March and $265 in early January.
Onion prices had shot up in India in early 2007 on lower arrivals and booming export demand from neighbouring countries. However, the government's export control and improving arrivals had brought down the prices again.
Wholesale prices in India's largest onion trading hub, Lasalgaon in Maharashtra state, have eased to Rs 500 a quintal, from 1,500 rupees in February. Retail prices have fallen from a peak of Rs 25 a kg to about Rs 9 in Mumbai.
"There is no shortfall of onion and it was necessary to cut the MEP," said, C B Holkar, Vice-Chairman of NAFED.
India, the world's second largest producer of onion, is expected to have exported an all-time record of 1.1 million tonnes in the year to March 2007, cashing in on output shortfall in neighboring countries, especially Pakistan.
However, the output is expected to fall to 5.5 millon tonnes in the current fiscal year, from 6.2 million last year, as heavy rains washed out part of the crop in western and southern India.
