Significant Changes in Onion Export Regulations
The Indian government has made a notable adjustment to the onion export regulations, reducing the duty on onion exports significantly from 40 percent to 20 percent. This reduction is set to take effect from Saturday, September 14, as per a notification issued by the Finance Ministry. The previous duty, enacted on May 4, was part of measures to control domestic pricing after recent fluctuations in onion costs.
Impact on Farmers and Exporters
This strategic move aims to boost onion exports, thereby enhancing the income potential for farmers across the country. Alongside the duty reduction, the government has also eliminated the minimum export price (MEP) of $550 per tonne for onions, a decision taken despite ongoing concerns regarding high retail prices in domestic markets.
Onion Export Statistics
As of July in the financial year 2024-25, India has exported approximately 2.6 lakh tonnes of onions. In the previous financial year, the country achieved a total export figure of 16.07 lakh tonnes of onions. The recent policy shift could lead to an increase in these numbers, as exporters are now able to compete more effectively in the global market.
Changes in Customs Duty on Oils
In contrast to the reduction in onion export duty, the government has increased the customs duty on sunflower and soybean oil. Specifically, the customs duty on crude sunflower oil has risen to 20 percent, while the duty on refined sunflower oil has been raised to 32.5 percent. This adjustment is designed to protect domestic oil producers amid fluctuating global oil prices.
Details of the Duty Adjustments
According to the latest notification, the basic customs duty on crude palm, soybean, and sunflower oil has been increased from zero to 20 percent. Additionally, the customs duty for refined palm, soybean, and sunflower oils has escalated from 12.5 percent to 32.5 percent. Consequently, the effective duty on these crude oils has surged from 5.5 percent to 27.5 percent, and for refined oils, it has increased from 13.75 percent to 35.75 percent. These changes will also come into effect from September 14.
Table: Summary of Duty Changes
| Item | Previous Duty | New Duty |
|---|---|---|
| Onion Exports | 40% | 20% |
| Crude Sunflower Oil | 0% | 20% |
| Refined Sunflower Oil | 12.5% | 32.5% |
| Crude Palm Oil | 0% | 20% |
| Refined Palm Oil | 12.5% | 32.5% |
| Soybean Oil (Crude) | 0% | 20% |
| Soybean Oil (Refined) | 12.5% | 32.5% |
Conclusion
The recent updates in export duties reflect a significant shift in the government’s approach to agricultural trade, with an emphasis on supporting farmers and boosting exports in certain commodities like onions. Conversely, the increase in duties on edible oils highlights the government’s efforts to safeguard domestic stakeholders. Stakeholders in the agricultural and food markets should closely monitor these changes as they navigate the coming months.
