December 12, 2023
KATHMANDU – Deepti Bhatta, a housewife from Kalanki, was shocked after she inquired about the price of onion on Sunday morning.
The price nearly doubled to Rs200 a kg in retail following India’s export curb last week.
“I bought a kilo and half of onion last Monday at Rs120 a kg. Today [on Sunday], it reached Rs200 per kg,” Bhatta said.
As expected, onion prices are increasing after India’s export ban, traders say. The price may further increase as Nepal is completely dependent on imported onion, mostly from India.
Traders say onion price may breach the November 2020 record before the end of this year. Back then, consumers paid Rs250 for a kg of the red bulbs.
Market insiders say that from rice to lentils and from sugar to onions, Nepali kitchens are getting expensive.
The onion export ban, which became effective on Friday, will last until March 31, according to a notice issued by India’s Directorate General of Foreign Trade.
The notification, however, says cargoes of vegetables that started loading before the notification can still be exported.
Onion price may hit a new record this year, traders say. Many online groceries and supermarkets have started placing “Stock not available” tags on their website since Friday.
Bhatta said that it would be difficult to cook food without onions, a major kitchen ingredient.
Officials say that despite the ban, a trickle of onions was still finding its way into Kathmandu.
“We are clueless about where they are coming from,” said Binay Shrestha, information officer at Kalimati Fruits and Vegetable Market Development Board.
“Around 22 tonnes of onion arrived in Kalimati vegetable market on Saturday. But the stock was cleared in minutes on Saturday night.”
“We have currently removed the price of onions from both the wholesale and retail price list on our website,” he said. He said that despite the ban there is a possibility of more onions arriving on Sunday night. “We, however, don’t know the source.”
Last week, traders halted importing potatoes and onions criticizing the government’s decision to impose VAT on them.
Onions are nowhere to be found in most online and physical vegetable stores.
In the first week of November, ahead of the Tihar festival, onions suddenly became pricier after India slapped a minimum export price to check shipments and ensure adequate supplies for its domestic consumers.
After that, the wholesale price of onion in Nepal jumped to Rs125 per kg, from Rs75 per kg previously.
In mid-November, the price reached Rs150 per kg.
Before imposing the minimum export price, India had introduced a 40 percent export duty on onions.
The Indian government decision has started causing a price-ripple effect in Nepal. Nepal gets nearly all its onion from the southern neighbor; any disturbance there reverberates across Nepali markets.
The board’s most recent import and listing of onions was on December 5 involving a consignment of 25.5 tonnes.
In November 2019, the price of onion hit a new high of Rs250 per kg in Kathmandu Valley after India banned onion exports in September of the same year to maintain domestic availability.
The ban caused a severe shortage of onions across Asia including in Nepal. The embargo was lifted in March 2020. India again stopped onion exports from September 2020 to January 2021.
At that time, some traders had even imported onions from China, but said Nepalis didn’t like Chinese onions because of their distinct taste.
Chinese onion is mostly used to make salads, mainly in hotels and restaurants.
According to the Department of Customs, Nepal imported 180,190 tonnes of onions worth Rs6.75 billion from India in the last fiscal year.
In Nepal, potatoes, onions and other daily consumable farm products are supposed to be exempt from VAT under the Tax Act of 1996. However, the government amended the law through the Financial Bill 2023 and removed 170 goods from the tax-free imports list in the current budget.
Nepali consumers pay import taxes totalling 23.5 percent on potatoes, onions and other vegetables, fruits and food items—9 percent agriculture service charge, 1.5 percent advance tax and 13 percent VAT.
The duty imposed by the world’s biggest exporter of onions is aimed at dampening local prices ahead of key state elections.
Consumer rights activists said there was sufficient stock of onion in the market, but opportunist traders had been creating an artificial shortage to make excessive profits.
They put emphasis on effective market inspection for onion prices to fall and consumers to easily get onions.