The government of India has officially announced the withdrawal of a 20% export duty on onions, effective April 1, 2025, following a significant easing of prices and increasing domestic supply. This decision, communicated by the Department of Revenue, aims to ensure that both farmers receive fair prices for their produce and consumers have access to more affordable onions.
This 20% duty was first implemented on September 13, 2024, as part of various measures designed to boost domestic availability of onions amidst rising international prices. To further restrict exports, the government also instituted a minimum export price (MEP) and an outright export prohibition between December 8, 2023, and May 3, 2024. Despite these restrictions, onion export volumes remained notably high, with total exports reaching 17.17 lakh metric tonnes (LMT) in the financial year 2023-24 and 11.65 LMT in FY 2024-25 as of March 18, 2025.
According to the Ministry of Consumer Affairs, Food & Public Distribution, the removal of the export duty comes at a critical moment, as both mandi (wholesale) and retail prices have softened due to an expected surge in the rabi onion crop production. The Ministry's statement reflects the government's commitment to ensuring that onion remains affordable for consumers while supporting the livelihood of farmers. It noted, “The decision stands as another testament to the government’s commitment to ensuring remunerative prices to farmers while maintaining affordability of onion to the consumers at this crucial juncture.”
On March 21, 2025, onion prices were reported at ₹1,330 per quintal in Lasalgaon and ₹1,325 per quintal in Pimpalgaon, showing a substantial reduction in contrast to previous months.
This expected production increase is underscored by estimates from the Department of Agriculture & Farmers Welfare, which project rabi production to reach 227 LMT this year. This figure represents an increase of over 18% compared to the 192 LMT produced the year before. Rabi onions, which constitute around 70-75% of India’s annual onion production, are crucial for maintaining market stability until the kharif crop begins to arrive in October and November.
In recent months, the market has been experiencing a downturn, largely as a result of heightened domestic supply due to the arrival of new rabi crops from major producing states such as Madhya Pradesh and Maharashtra. Since late February, onion prices have dropped by approximately 30-40%. This decline has created pressure on the government to lift or modify the export restrictions that have been in place.
The overall market sentiment surrounding onions has dramatically changed since the period of low domestic production and soaring prices that commenced in August 2023. Subsequently, the increase in local supplies, compounded by alleviating restrictions on exports, is expected to lead to further price corrections in the coming months.
According to further data, onion exports peaked at 1.85 LMT in January 2025, marking a steady increase from just 0.72 LMT in September 2024, demonstrating resilience in export activity despite earlier restrictions.
Market analysts highlight that while the current mandi prices are still higher than average levels from previous years, there has been a marked decline of 39% in all-India weighted average modal prices. Conversely, average retail prices for onions have dropped by around 10% during the same timeframe.
This newer agricultural cycle has led to enhanced expectations of supply, prompting both farmers and consumers to anticipate a more stable pricing environment in the foreseeable future. If these trends continue, it’s expected that the government’s decision to withdraw the export duty will not only benefit farmers but also lead to a balance in consumer pricing.
The decision to lift the export duty indicates a strategic shift in agricultural policy aimed at addressing both farmer welfare and consumer affordability in a rapidly changing marketplace. Moving forward, the government is keen to monitor market trends closely, ensuring that both the interests of consumers and producers are adequately balanced.
