Indian onion exports face more trouble as Customs officials use different base prices to calculate export duty
Indian onion exports are facing further trouble as Customs authorities across various ports in the country are using different base rates to calculate the 40 per duty imposed on shipments from August 19.
The Customs authorities are using these base rates to ensure that exporters do not under invoice their consignments to lower the impact of the export duty. “Customs authorities in Mumbai JNPT are calculating export at a base rate of $325 a tonne, while in Tuticorin, it is $250 a tonne. Chennai Customs authorities have pegged the base rate at $400. These rates have created a lot of confusion for traders since they have to export at prices promised to buyers and cannot afford to incur losses,” said M Madan Prakash, President, Agricultural Commodities Exporters Association (ACEA).
Unique taste, pungency
“These base rates don’t reflect the realistic prices. Onion prices are actually about $500 f.o.b but some exporters are under invoicing the rates. We have asked the Commerce Ministry to assess the value at which the export duty will be imposed. We should know in a week’s time,” said Ajit Shah, President, Horticulture Produce Exporters Association (HPEA).
Some of the exporters are pegging onion export price at $150 or $250 in their invoice to lower the impact of the export duty. “There is demand for Indian onion in view of its unique pungency and taste. The duty might lower the consumption by 40 per cent,” Shah said. “We are getting demand from the Philippines. Letters of credit have been opened with Bangladesh traders. They are being fulfilled,” said ACEA’s Prakash.
Out of Dubai market
Indian onion is witnessing demand since key suppliers in the global market such as Egypt and Turkey have run out of stocks. “Turkey onion will be available in a fortnight’s time. Limited stocks of Pakistan onion are available at $370,” said the HPEA president.
Iran is offering onions at $300, though stocks are low. Countries such as Malaysia are not buying.
A Gulf-based trade source said Indian onion was out of Dubai and other markets in July-end after prices surged. “Indian onions are not competitive in United Arab Emirates (UAE) markets, particularly Dubai. Shipments from India were stopped 15 days before the export duty was imposed,” the source, who did not wish to identify, said.
“In UAE markets, onions are available at less than a dirham (₹21-22), whereas Indian onions cost over 1.5 dirham(₹38-39),” said the source. In contrast, onion in Colombo costs 150-160 Lankan rupees (₹38-41), making the Indian kitchen staple more acceptable.
On the other hand, Bangladesh lost an opportunity to have more stocks of Indian onion as it had banned imports for some time. “Dhaka opened imports only a month ago,” the source said.
India imposed a 40 per cent export duty on onions after their prices surged by over 70 per cent in the past month. Onion prices have increased despite record arrivals since April 1 this year.