A current drought and rising prices have prompted the government to revoke 10% incentives under the Merchandise Exports from India Scheme.
The aim of the removal of incentives for export of fresh and chilled onions is to discourage outbound shipments of the kitchen staple due to rising prices in the domestic market. Exporters of onion were earlier availing incentives under Merchandise Exports from India Scheme (MEIS) at the rate of 10 per cent.
The Directorate General of Foreign Trade (DGFT), an arm of the commerce ministry, in a public notice dated June 9, stated it is withdrawing the benefits for exports of fresh and chilled onions. “The rate at which MEIS benefits for exports of fresh and chilled onions is granted under the foreign trade policy has been made zero from the current 10 per cent with immediate effect.”
In December last year, the government had doubled the rate of incentives from 5 per cent to 10 per cent under this scheme to boost shipments and ensure better returns for farmers. The incentive was to be there till June 30 this year. Under MEIS, the government provides duty benefits depending on product and country.
The decision of withdrawal of the incentives assumes significance as the Centre has started creating a buffer stock of 50,000 tonne of onion to check prices in the coming months in view of drought conditions in producing states.
Wholesale prices at Lasalgaon in Maharashtra, Asia’s largest wholesale market for onion, have shot up by about 48 per cent to ₹ 13.30 per kg on Tuesday when compared to ₹ 9 per kg on the same day last month, as per official data.
Thehindubusinessline.com reports how in the national capital, retail onion prices are ruling at ₹ 20-25 per kg depending on the varieties. Key onion growing states such as Maharashtra, Karnataka and Andhra Pradesh are reeling under drought conditions this year.