India's onion exports treble, set new record on MEIS extension

Sops under MEIS were extended to boost exports, as realisations abroad were better than at home

India’s onion exports are estimated to have almost trebled in the recently ended financial year 2016-17, following the government’s move to incentivise overseas consignments. The move was taken to encourage large shipments of the commodity to overseas markets, as realisations abroad were better than those in the domestic market.

Data compiled by the government-owned Agricultural & Processed Food Products Exports Development Authority (Apeda) showed India’s overall onion exports at 2.39 million tonnes for the period between April and December 2016.

Ajit Shah, President of Horticulture Exporters Association believes that another 150,000-200,000 tonnes were exported every month thereafter. Assuming 200,000 tonnes per month shipped for the next three months i.e. between January and March 2017, India’s overall onion export is estimated to have achieved three million tonnes for 2016-17, an all-time record.

“The Merchandise Exports from India Scheme (MEIS) scheme was initiated when onion prices were hovering around Rs 2–2.5 a kg in the benchmark Lasalgaon wholesale mandi in Maharashtra. Farmers in Lasalgaon (Nashik district) were indulging into leaving onion unharvested in the field as the prevailing price could not cover the cost of transportation to the mandis. However, the MEIS scheme arrested the fall and onion price recovered to trade between Rs 5-5.50 a kg. This price level is simply equivalent to the cost of production. But, farmers need a little more in order to be encouraged to sow onion the next season,” said Hansaraj Patil, a farmers’ representative in Lasalgaon.

Faced with a sharp decline in onion prices on expectations of bumper output, the Ministry of Commerce and Industry extended benefit under MEIS to onion and directed traders to export it in large quantities. Available for many exportable goods including textile products, MEIS allows exporters to obtain five per cent credit on the free on board (FOB) value of onions, both fresh and chilled.

Spiralling growth: India’s onion exports
Financial year	Quantity (mn tonnes)	Value (Rs cr)	PUV (Rs/tonne)
2010-11	1.34	2,159	16,103
2011-12	1.55	2,141	13,790
2012-13	1.82	2,295	12,590
2013-14	1.36	2,877	21,184
2014-15	1.09	2,010	18,507
2015-16	1.11	2,529	22,691
2016-17*	3.00	--	--
Source: DGCIS and Nafed; * Estimates

The MEIS scheme, initiated for onion exporters in August 2016, has been extended periodically. The latest extension, as per a notification dated March 31, 2017, makes benefit under the scheme available till June 30.

India is currently exporting huge quantities to Colombo, the Far East, West Asia and all other destinations that consume onion at prices higher than prevailing market price in local mandis. Interestingly, however, the average realisation, or the per unit value (PUV), has been drastically lower this year due to subdued trends in the domestic markets.

According to Apeda, India’s onion PUV stands at Rs 14,109 per tonne for the current year, the lowest in four years, and around 36 per cent lower than last year’s level of Rs 22,691 per tonne.

Shah said that exports would continue till June, as the new crop is set to hit the world market from Yemen after about a month. But, Indian exporters would continue to remain competitive due to MEIS, he added.

The first advance estimates released by the Ministry of Agriculture forecast India’s onion output to be six per cent lower at 19.7 million tonnes this year. Despite a marginal decline, India’s output remains bumper with lower stockists’ hoarding.