Interestingly, the `illegal' exports of onions are taking place at a time when international prices have risen dramatically. In other words, by allowing certain exporters to export onions despite the ban, based on licenses which have actually expired, the DGFT is actually favouring a few select companies, through NAFED which is one of the canalising agencies through which exports take place.

The story begins in February, when the government ordered a partial lifting of the ban on exports of onions till May 31. These export orders were to take place through agencies such as NAFED, a Gujarat government agency and a Maharashtra government agency. These bodies were to issue No Objection Certificates (NoCs) toexporters.

What was done, by DGFT's first circular on June 2, was to allow onion exports against valid NOCs -- how the NoCs could still be valid after May 31 is anyone's guess. Under the law, if the validity of NoCs is to be extended, this can be done only through another notification, which obviously requires Cabinet clearance. Since this obviously did not take place, the DGFT issued circular letters instead, which have no validity under the law.

This circular was then followed up with other similar notifications, the last of which was issued on June 25 permits exports against NOCs till July 15. Interestingly, Commerce Ministry sources say this is not illegal, and say this is being done because there are unutilised licenses for onion exports, and therefore these are being honoured.