Govt scraps 10% MEIS incentives on onion exports to curb domestic prices

MEIS rate had doubled to 10% last December, as prices ranged between Rs 1-3 a kg wholesale. The move took bulk prices to Rs 13 a kg steadily, and retail to Rs 20-25 a kg across the country

The government has withdrawn 10 per cent export incentives granted to onion to discourage shipment out of India and prevent further escalation in prices in the domestic markets.

In a notification issued on Tuesday, the Directorate General of Foreign Trade (DGFT) said, “The rate at which Merchandise Export from India Scheme (MEIS) benefits for export of onions fresh or chilled is granted under the Free Trade Policy (FTP) has been brought down to zero from the current 10 per cent with immediate effect.”

This means, exporters enjoying 10 per cent of MEIS benefits would no longer would get such relief. This is set to restrict India’s outbound shipment of onion and improve the domestic supply situation and curb prices. The MEIS was applicable till June 30, 2019.

The MEIS scheme on onion was first introduced in February 2018 to encourage exports and curb free fall in prices at home. In February 2018, onion had fallen to one rupee a kg amid an increase in supply.

The government doubled the MEIS rate to 10 per cent in December last year as prices ranged between Rs 1-3 a kg in the wholesale Lasalgaon mandi in Maharashtra. MEIS helped farmers in a big way, with onion prices shooting up to Rs 13 a kg steadily. In retail, onion is sold at Rs 20-25 a kg across the country.

“This season again, we are expecting prices to remain range bound with no untoward escalation,” said Sanjay Sanap, a wholeseller in Lasalgaon mandi.

Under MEIS, exporters get a 10 per cent incentive on the free on board (FOB) prices realised from overseas importers.

Meanwhile, the government has started building up buffer stocks of up to 500,000 tonnes of the bulb, with an aim to intervene in case prices start rising abnormally.

Also, the Union Ministry of Agriculture in its first Advanced Estimates has estimated India’s onion output at 23.62 million tonnes for the year 2018-19 (July–June), marginally up from 23.26 million tonnes reported the previous year.

India exports onions mainly to Bangladesh, Malaysia, Sri Lanka and the United Arab Emirates.

Data compiled by the Agricultural and Processed Food Products Export Development Authority (Apeda) showed India’s total onion exports at 1.9 million tonnes (worth $410 million) for the period between April 2018 and February 2019 as compared to 1.39 million tonnes ($437 million) in the same period last year.