Indian government lifts onion export duty: boost for farmers in Maharashtra, Madhya Pradesh, and Gujarat

Date:03-27-2025

In a move to stabilize the onion market, the Indian government has announced the removal of the 20% export duty on onions effective April 1. The duty, initially implemented on September 13, 2024, aimed to control domestic inflation while ensuring fair returns for farmers. However, with onion prices declining by 30-40% since late February due to an anticipated bumper rabi harvest, the government has opted to lift the restriction.

India’s onion exports remained resilient despite the duty, with approximately 1.71 million tons shipped in FY24 and around 1.16 million tons exported by mid-March in FY25. The Department of Agriculture projects this year’s rabi onion production at 22.7 million tons — an 18% rise from last year. The rabi season contributes to 70-75% of India’s overall onion output, helping stabilize prices until the kharif harvest arrives in October and November.

The increased supply of rabi onions from key states like Madhya Pradesh, Maharashtra, and Gujarat has contributed to a significant price drop in production hubs like Nashik and major consumer markets like Delhi. As a result, the competitiveness of Indian onions in the global market is expected to improve. Notably, the 20% export duty had previously impacted India’s market share, particularly against Pakistani onions. For instance, India’s onion exports in November 2024 were valued at $52.79 million — nearly 47% lower than the same month the previous year.

From April to December 2024, India’s onion exports amounted to $392 million, with the full-year figure for FY24 estimated at $500 million. Bangladesh emerged as the largest importer, accounting for nearly 48% of India’s onion exports, followed by Malaysia.

Since December 2023, the government had maintained export restrictions, including a brief ban, a Minimum Export Price (MEP) of $550 per tonne, and a 40% export tax. Although the MEP was lifted in September 2024, the 20% export duty remained until its recent withdrawal. Industry experts believe that the export duty was justified when prices were high, but it became counterproductive as fresh rabi crops started entering the market.

India produces around 28-30 million tons of onions annually, primarily across three growing cycles — kharif, late kharif, and rabi. Given the perishable nature of onions and the production gap between these cycles, prices typically peak from September to December before stabilizing with the rabi harvest. The removal of the export duty is expected to support farmers by increasing market opportunities while maintaining a balance between domestic availability and global demand.

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