Government doubles export incentive on onion to shore up prices, boost shipments

Concerned over the fall in onion prices, the government Friday doubled the export incentive for the kitchen staple to boost shipments and ensure better returns for farmers.

The scheme has also been extended till June 30 next year.

At present, onion exporters get 5 per cent incentive on fresh crop under the Merchandise Exports from India Scheme (MEIS), which was valid till January 12, 2019. 

"The government today increased the export incentives under the MEIS from existing 5 per cent to 10 per cent in the interest of farmers," an official statement said.

This will result in better price for onion in domestic markets. Wholesale prices of onion are "subdued" at present due to increase in the arrival of the fresh crop in the mandis, it said.

"To contain the situation, it has been decided by the government to encourage export of onions so that the domestic prices stabilise," the statement said.

With the current increase, onion enjoys one of the highest incentives for agro-exports. This timely intervention would help the farmers who have recently harvested their produce and who have sowed or recently planted their seeds and expected better prices, it added.

In July 2018, the government had introduced 5 per cent export incentive for fresh onions.

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Commerce Minister Suresh Prabhu had earlier pitched for doubling the export incentive to support prices.

In a communication to Finance Minister Arun Jaitley, the minister sought Rs 179.16 crore to double the incentives for onion exporters amid significant fall in prices of the vegetable. Under MEIS, the government provides duty benefits depending on product and country.

Rewards under the scheme are payable as percentage of realised free-on-board value and MEIS duty credit scrip can be transferred or used for payment of a number of duties, including the basic customs duty.

Maharashtra Chief Minister Devendra Fadnavis, in a letter to the commerce minister, had said that prices of the commodity has fallen to as low as Rs 200-350 per quintal in markets, creating tremendous discomfort among farmers.

India's exports of fresh and chilled onion stood at USD 256 million during April-October 2018-19. It was USD 511.5 million in 2017-18.

Good monsoon rainfall in states like Karnataka, Gujarat and Madhya Pradesh has led to huge production of onion.

Due to this, onion from Maharashtra has not been transported to other states, which caused a glut and sharp decline in prices.