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India curbs onion shipments by imposing minimum export price

MUMBAI (Reuters) - India has imposed an $850 per tonne minimum export price (MEP) on onion shipments, the government said on Friday, as the world’s biggest exporter tries to calm local prices ahead of key state elections.

A worker sorts onions at a wholesale vegetable market in Chandigarh, India, July 24, 2015. The price of Indian onions, a staple that has sparked protests in the past and toppled state governments, has jumped to its highest in nearly two years and could fuel food inflation as scant rain delays plantings. REUTERS/Ajay Verma

The higher export price will help India’s rivals China, Egypt and Pakistan raise shipments to buyers such as Bangladesh, Malaysia, the United Arab Emirates and Sri Lanka.

Wholesale prices in India’s largest onion trading hub, Lasalgaon in the western state of Maharashtra, have nearly doubled in a month to 29,500 rupees ($416) per tonne.

Ajit Shah, president of the Mumbai-based Onion Exporters’ Association, said the government set export price was too high and no one would buy from India at this price.

“China, Egypt and Pakistan are offering onions at much lower prices. Buyers will switch towards these suppliers,” he said.

Onions are used as the base for traditional dishes across Asia such as biryani in Pakistan and India, belacan in Malaysia and fish curry in Bangladesh.

In June, India withdrew 10% export incentives on onions after prices started to rise due to dwindling supplies from last year’s harvest and a delay in planting of the summer-sown crop.

Onion prices could start moderating from November with the arrival of the new season crop, said a Mumbai-based exporter, who declined to be named.

“The government will remove restrictions once prices fall below 15,000 rupees per tonne,” he said.

India exported 2.2 million tonnes of fresh onions in the 2018/19 fiscal year ended March 30.

($1 = 70.9370 Indian rupees)

Reporting by Rajendra Jadhav; editing by David Evans