Government plans to import onions to prevent further spike in prices.

PUNE: The government plans to import onions from Pakistan, China, Iran and Egypt as it seeks to prevent another spike in the price of the politically sensitive commodity.

The National Agricultural Co-operative Marketing Federation of India Ltd (Nafed) has floated tenders for importing 40,000 tonnes of onions after August 15, which would be timely as shipments can arrive before the possible jump in onion prices by October, unlike last year when imports were contracted too late to make a dent in retail prices.

Though trade analysts say that this move can help keep domestic prices under control, which have already remained stable in July, importers say that their response could be lukewarm due to some conditions in the tenders. After the wholesale onion prices appreciated by 80% in June, they have remained stable between Rs18/kg to Rs20/kg at the major onion hub of Lasalgaon in July, with a slight decline of Rs1/kg to Rs2/kg in last two days. Traders attribute this to a fall in exports and lesser speculation.

"Export demand was less due to Ramadan. There is ample onion in Rajasthan, which will take care of the requirements of north India for at least next 15 days," said a trade source. Demand from Sri Lanka is less as the local crop arrival has started there. Sri Lanka will impose import duty on onions from August 1. "Right now Indian onion is not competitive to export," said a Mumbaibased exporter.

Sources say speculation had reduced. "Speculation was also responsible for the price rise in June, which reduced in July as traders cannot do hoarding for more than four to five days after the onset of rains," said a source requesting anonymity. No government agency has authentic data available about the progress in sowing after the revival of rains in the country.

But despite any progress in onion sowing, the delay in sowing by more than a month is still expected to put pressure on demand and supply situation in September and October.

This makes traders believe that imports can be profitable this year. However, importers claim that some conditions in Nafed tenders may put off the importers. "Nafed wants to make payment 15 days after the delivery. Looking at the financial conditions of Nafed, no one will like to take that risk," said an onion exporter/importer.

He said that Nafed has informed that it will soon remove the phytosanitary requirements from the tender, which closes on August 2. Delayed decision to import onions last year, when retail prices had touchedRs100/kg, had proved futile to control domestic prices.

Source : economictimes.indiatimes.com