India is known for using trade bans, quotas, tariffs and duties as tools to control the domestic price of agricultural goods that the government deems critical to the cost of living for its citizens. India often applies trade restrictions during times of increasing or higher-than-usual prices, and trade liberalization when price drops threaten the profitability and well-being of the domestic producers.
Most recently, India lifted a 20% onion export duty on April 1, 2025. This was implemented by the government to counteract the lacklustre export demand and falling prices. As of May 28, 2025, price series 6P52 – Onion wholesale price India reported by Expana shows a 32.4% quarterly drop and a 15.1% y-o-y decrease to INR 20,973/mt. The impact of the export duty removal has not counteracted the onion oversupply enough to stop the week-on-week decline during April and May. This is due to supply from the ongoing Rabi harvest and the forecasted onion production of 28.9 million mt by the Indian Agricultural Ministry for 2024/25, if realised it would be a 19% y-o-y recovery from the dip in 2023/24 production that instigated the restrictions on onion trade.
As prices continued to fall, the Horticulture Produce Exporters’ Association (HPEA) started advocating to the Indian government in April to encourage export demand further. They have called on the government to implement a rate increase from 1.9% to 5% for the remission of duties and taxes on onion exports. This would allow Indian exporters to have a greater advantage through improved competitive pricing. However, due to supply typically tightening from May till October prices are likely to stabilise and then increase in the coming months as it has historically done. It is unlikely the Indian government will apply tax reliefs to onion exports, which only recently had export duties removed. Indian officials have taken some further measures on April 24, 2025 to help lower logistics costs related to agricultural products, such as onions. The removal of a transshipment permit fee is expected by market participants to save time and cost when exporting onions.
Image source: Getty
Written by Luca Curioni
