MUMBAI (Bloomberg): India added onions to the nation’s expanding list of food staples slapped with sweeping export restrictions, as the government seeks to contain domestic prices ahead of a national election next year.
Overseas shipments of onions will be banned until March 31, although cargoes of vegetables that started loading prior to the notification can still be exported, the government said Friday. The ban follows government measures in August to release stockpiles of the staple to shield consumers from rising costs.
The onion ban comes a day after India restricted the use of sugar cane juice to produce biofuels, a move aimed at expanding its reserves of the sweetener, and follows curbs on wheat and rice. The measures have spilled over into the global market, threatening food supply from Asia to Africa and boosting some prices.
"A build up in food inflation has prompted the government to take several actions to shore up domestic food supply, both through the use of export bans and higher imports,” said Rahul Bajoria, an economist at Barclays Plc. "This will likely be a feature till the national elections in the middle of 2024.”
The Reserve Bank of India left its key policy rate unchanged Friday, raising concerns about higher food prices. Average retail prices of onions, tomatoes, rice and sugar in India have jumped 98%, 32%, 14% and 5%, respectively, from a year earlier, according to data compiled by the food ministry.
India may still permit onion exports to countries that seek an exemption on the grounds of food security, according to a notice from the Directorate General of Foreign Trade.
A similar provision exists for rice shipments. - ©2023 Bloomberg L.P.
