NEW DELHI: India has lifted restrictions on the export of onions, according to an official notification on Saturday, a day after the government announced a 40 percent export duty.
The export ban was imposed by the world's biggest exporter of the vegetable last December and then extended in March.
The policy changes comes in the middle of staggered voting in India's national election in which Prime Minister Narendra Modi is seeking a rare third term. Parts of India's onion producing belt in the western state of Maharashtra are yet to vote.
While lifting the ban, the government also announced a minimum export price of $550 per metric tonne for exports.
"The export policy of onions is amended from prohibited to free subject to MEP of $550 per metric tonne with immediate effect and until further orders," the directorate general of foreign trade (DGFT) said in a notification.
"This is after taking into account estimated rabi production 2024 and good kharif (summer-sown) prospect because of above normal monsoon."
Onions, which are a major ingredient in Indian food and a politically sensitive commodity, are cultivated three times a year - in monsoon, winter and summer.
India's onion production in the rabi season in 2024 is estimated to be 19.1 million tonnes, which is a "comfortable" level to allow overseas sales given local monthly consumption is about 1.7 million tonnes, a government official said.
Traders estimate that India, which has shorter shipment times than rivals such as China or Egypt for many markets, accounts for more than half of all onion imports by Asian countries.
India exported a record 2.5 million metric tonnes of onions in the year-ending March 31, 2023.
Last month, in an official statement, the Ministry of Consumer Affairs, Food and Public Distribution said the government has allowed export of 99,150 tonnes of onion to six neighbouring countries of Bangladesh, UAE, Bhutan, Bahrain, Mauritius and Sri Lanka.
Countries such as Bangladesh, Malaysia, Nepal and the United Arab Emirates rely on imports from India to fill domestic gaps in onion supply and many of those nations have struggled with high prices after the ban.
While putting onion export under 'prohibited' category, the Indian government had been allowing limited exports after getting requests from some countries, including Bangladesh, Sri Lanka and UAE.
Onion traders and farmers, particularly from Maharashtra, had been demanding to lift ban arguing this would help farmers get better price. But the government didn't relent fearing export of the key kitchen item may push up domestic prices.