Import duties on onion abolished; exports banned

In a bid to cool the skyrocketing retail prices, government has abolished import duties on onion and banned its exports for an indefinite period even as wholesale prices started showing signs of decline.

However, the retail prices of the staple vegetable in markets across the country have not shown any change from Tuesday's level of Rs 70-80 a kg.

Agriculture Secretary P.K Basu expressed confidence that the retail prices would come down in 7 to 10 days with the expected arrival of fresh crops.

Deputy Chairman of Planning Commission Montek Singh Ahluwalia said the spike in onion prices was only a temporary phenomenon due to unseasonal rains.

"To counter the sudden and unexpected rise in prices of onions, the department of revenue has brought down customs duty and countervailing duty to zero," Finance Secretary Ashok Chawla said.

The government also notified the ban on export of all varieties of onion till further orders.

The steep hike in onion prices set alarm bells ringing in the government, which initially suspended export of ban till January 15, 2011 and later banned it till further oorders.

Onion imports hitherto attracted customs duty of 5 per cent while counterveiling duty had been fixed at 4 per cent.

Countervailing duty is levied to protect domestic producers. Abolition of import levies, Chawala said, would help in increasing supplies through imports. On the possible sources of imports, the Finance Secretary, said "how much and from where...I can't say at this moment."

These steps come amid a sharp rise in the price of onions up to Rs 70-85 per kg in retail markets across the country from just Rs 35-40 a few days ago.

However, following the earlier decision to suspend exports, the wholesale prices had already started showing a dip.

While, the wholesale prices at the country's largest trading centre in Nashik dropped by upto 42 per cent, the prices at the Azadpur Mandi in Delhi (Asia's largest fruit and vegetable market) came down by upto 29 per cent.

... contd.

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