Union Govt Imposes 40% Customs Duty on Onion Exports to Try and Control Domestic Price

This tax, the CBIC said, being imposed in "public interest", will be in place till December 31, 2023.

New Delhi: The Central Board of Indirect Taxes and Customs (CBIC) on Saturday (August 20) imposed a 40% customs duty on onions being exported from India, Livemint reported. This move comes in the light of rising local prices of the vegetable.

This tax, the CBIC said, being imposed in “public interest”, will be in place till December 31, 2023.

“The export duty will make Indian onions more expensive than those from Pakistan, China, and Egypt. This will naturally lead to lower exports and aid in reducing local prices,” Ajit Shah, an exporter based in Mumbai, told Reuters.

The average wholesale onion price in key markets has jumped nearly 20% from July to August, to Rs 2,400 per 100 kg, according to the agency. There is concern that erratic rainfall and weather patterns will further affect production.

The Union government had earlier decided it will maintain three lakh tonne of onions in the 2023-24 season as buffer stock. In 2022-23, the government maintained 2.51 lakh tonne onion as buffer stock, ANI reported.

This is not the first trade-related measure the government has taken to try and fight inflation.  The government has already placed restrictions on the export of wheat and rice. Earlier, the Union government had reduced the import duty on edible oils.