Centre asks states to impose stock limits on onion traders

New Delhi: Concerned over rising onion prices, the Centre on Wednesday asked state governments to impose stock limits on traders to check hoarding and curb further increase in rates of the kitchen staple.

The government is also considering restricting exports by imposing minimum export price (MEP) to boost local supply and keep prices stable, sources said.

Retail onion prices in the national capital have risen to Rs 38/kg as of today from Rs 22/kg in the year-ago period. Onion is sold at Rs 34/kg in Mumbai, Rs 40/kg in Kolkata and Rs 29/kg in Chennai, as per official data.

"To control the prices of onion, state governments have been advised to impose stock limits for onion on traders/ wholesalers," Food and Consumer Affairs Minister Ram Vilas Paswan tweeted.

A letter in this regard has been sent to state governments, who are empowered to take action against onion traders under the Essential Commodities Act.

Onion prices have shot up in the last few weeks due to depleting old stocks and concerns about this year's output as kharif sowing area is down by 20-30 percent.

Recently, Paswan had also written to the Commerce Ministry seeking imposition of MEP of USD 450 per tonne on onion to curb outbound shipments and withdrawal of incentives given to traders for its export.

The issue was discussed at the recent meeting of the Committee of Secretaries, which too favoured imposition of MEP. A final decision is expected to be taken soon, sources said.

Onion MEP was scrapped in December 2015. The MEP is the minimum rate below which exports cannot be undertaken.

Last fiscal, India exported 34.92 lakh tonnes of onion.

Onion stock of 2016-17 is being consumed currently. The new kharif crop is expected to arrive in full swing from next month.