Govt doubles export incentives for onion farmers to 10%

The move, which follows a steep drop in onion prices in recent weeks, a staple for Indian households, will result in better prices for onions in the domestic market, the government said in a statement.

The export incentive programme allows farmers to get a credit from the government, which can be used to pay various taxes.

Under the scheme, exporters get duty-free scrips, which can be traded or used to pay a number of taxes. The move is expected to encourage exporters to buy more of the commodity from farmers, boosting demand for the politically sensitive farm produce.

“This will result in better prices for onion in domestic markets.... Onion arrivals have increased in the market at present due to which the prices in the mandis are subdued. To contain the situation, it has been decided to encourage exports so that domestic prices stabilise,” the government said.

Onion now enjoys one of the highest incentives for agro-exports, the ministry said. The move will help farmers who have recently harvested or sowed seeds anticipating better prices, it said.

This is in sharp contrast to the Congress’ move in the states it had won in the recent assembly elections. “The Congress would waive farm loans within six hours of forming government in Haryana,” Bhupinder Singh Hooda, Congress leader and former Haryana chief minister, said on Friday. The state goes to assembly polls next year.

“Domestic onion prices are quite depressed. A 10 per cent incentive under the Merchandise Exports from India Scheme is sufficient for exporters to ship more onions. There is demand for onion in the Middle East and other markets. As exports expand, farmers will gain,” said Ajai Sahai, director general and chief executive officer of Federation of Indian Export Organisations.