India raises minimum export price for onions
- 2 July 2014
- From the section Business
India has raised the minimum export price for onions, to maintain price levels at home, as fears grow of a shortage because of adverse weather conditions.
Effective immediately, exports of onions can only take place at or above the price of $500 (£292) per tonne.
That is a 67% jump from the government's recent pricing policy on a key ingredient for Indian dishes.
Two weeks ago the government had set a minimum export price of $300 per tonne.
But at a recent meeting the government's findings showed that wholesale and retail prices of onions have been going up.
The inter-ministerial committee said in a statement it reached a unanimous decision to raise the minimum export price, keeping in view "rising retail and wholesale prices and delayed monsoon."
Rainfall in June, the first of the four-month monsoon season has been below average across the country. A poor monsoon season generally stokes food inflation, in addition to delaying the exports of some crops and increase the need for imports.
India has been producing, on average 18 million tonnes of onions per year. Most of the local produce is for domestic consumption. Last year, the country exported less than 10% of its onion harvest.
Reviving the economy
India's new prime minister, Narendra Modi, who was sworn in just over one month ago, had made tackling inflation his top priority after widespread resentment about rising prices contributed to the exit of the previous government.
Mr Modi's administration is scheduled to present its first budget next week.
Many observers will be looking at what measures the new government will be implementing, to tackle food inflation, manage the trade gap and create jobs for India's youth, as it attempts to revive the economy.
Asia's third-largest economy has been experiencing subdued growth, due largely to a slowdown in the manufacturing sector.
The latest figures showed an economic expansion of 4.6% in the three months to March, which is below analysts' forecasts and at the same pace as the previous quarter.