India's Onion Export Ban Sparks Price Surge: Unravelling the Impact on Asian Markets

Onion Export Ban Impact

1. India's ban on onion exports, effective from Dec 8, has led to a surge in onion prices for Asian buyers.

2. Traditional buyers, including Bangladesh, Malaysia, Nepal, and the UAE, now face challenges due to increased prices.

3. Many Asian cuisines, from Malaysia to Sri Lanka, rely heavily on Indian onions for various dishes.

4. Retail shoppers across Asian cities, like Dhaka and Colombo, are grappling with the sudden spike in onion prices.

India's Role in Onion Imports

1. India is the world's largest exporter of onions, accounting for over half of all onion imports by Asian countries.

2. In the previous financial year, India exported a record 2.5 million metric tons of onions, with Bangladesh being the largest buyer.

Consequences for Importing Nations

1. Supply Challenges: Bangladesh is diversifying sources to countries like China, Egypt, and Turkey due to the shortage caused by India's ban.

2. Domestic Mitigation Measures: Bangladesh is selling subsidized onions to counter a 50% price surge, especially in light of upcoming general elections.

3. Nepal's Struggle: Being landlocked and heavily reliant on imports, Nepal faces a significant challenge in securing onions, considering the ban.

Alternatives and Market Dynamics

1. Higher Costs: Importing nations are forced to turn to more expensive suppliers like China, Iran, Pakistan, and Turkey.

2. Market Dynamics: Prices in these alternative markets have risen following India's exit from the market.

3. Appeal for Export Resumption: Some argue that India should lift the ban, especially as domestic supplies are now sufficient, to maintain its global market position.

Outlook and Challenges Ahead

1. Duration of Ban: The ban is expected to continue until India's general elections next year, with the government prioritizing food price control.

2. Impacted Commodities: Besides onions, India has also limited exports of rice, sugar, and wheat.

3. Global Implications: The ban has led to significant price increases in importing nations like Sri Lanka and Malaysia, prompting efforts to secure alternative supplies.

Author : Dr Ishan Yadav

Date : 21 December 2023