Impact of India’s Onion Export Ban on Asian Markets

India’s recent ban on onion exports has had a ripple effect across Asian markets, leading to increased prices and concerns among traditional buyers. The export restriction, implemented on December 8, is unlikely to be lifted before India’s general elections next year, adding pressure to already elevated onion prices.

As the world’s largest exporter of onions, India’s ban has significantly affected Asian nations that heavily rely on imports from India, including Bangladesh, Malaysia, Nepal, and the United Arab Emirates. The abrupt increase in onion prices has created challenges for retail shoppers across the region.

Consumers, such as Mousumi Akhtar in Dhaka, Bangladesh, express the difficulty of coping with the sudden surge in onion prices, impacting their daily cooking habits. Onions are a crucial ingredient in various Asian dishes, from Malaysian belacan shrimp paste to Bangladeshi biryani and Nepali chicken chillies.

Traders estimate that India constitutes over half of all onion imports by Asian countries, emphasizing the importance of its shorter shipment times in preserving the taste of the perishable commodity compared to other exporters like China or Egypt.

During the last financial year, India exported a record 2.5 million metric tons of onions, with Bangladesh being the largest buyer. As a response to the shortage caused by India’s export ban, Bangladesh is exploring alternative sources such as China, Egypt, and Turkey.

With general elections approaching in Bangladesh, the government is taking measures to alleviate the impact on citizens, including selling subsidized onions to offset the price surge. Similarly, landlocked Nepal, heavily dependent on onion imports, is facing challenges in maintaining a stable supply.

Importing nations are grappling with more expensive onion supplies from alternative sources like China, Iran, Pakistan, and Turkey, all of which have increased prices due to India’s absence from the market. If India’s export ban persists, these alternatives may face shortages.

Despite a subsequent 20% decrease in onion prices within India due to the arrival of the new season’s crop, exporters argue that maintaining India’s global market position requires resuming exports. However, the export restrictions are expected to remain in place until after next year’s general elections, as the Indian government prioritizes controlling food prices.

New Delhi has also imposed restrictions on the exports of rice, sugar, and wheat. Meanwhile, onion prices have nearly doubled in Sri Lanka, and Malaysia is actively seeking alternative suppliers from China and Pakistan to mitigate the impact of India’s ban.

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