India’s onion instability irks the US and Japan at WTO


The United States and Japan have raised concerns about India’s frequent bans on onion exports at the World Trade Organization (WTO), claiming that such prohibitions without prior notice put importing countries in a tough position.

India has been asked to explain its actions and provide reasons for not opting for an export quota, which would limit the quantity of exports allowed.

Both countries said India was asked to justify its ban on onion exports at the WTO’s agriculture committee meeting last month. “However, India failed to provide any concrete response, instead just stating that it was in effect temporarily,” they stated.

Both countries then demanded an explanation from India as to why the notification was not made before the measure was taken, despite the fact that prior notification is required under Article 12 of the Agriculture Agreement. “Explain how India has taken into account the impact of the action on the food security of importing members. Please explain why India chose export bans over an export quota, which would enable a set quantity of exports,” Japan and the United States urged in a joint statement.

The government restricted the export of all varieties of onions in September, anticipating a shortfall after exports increased by 30% from April to July.

Onion producers, as well as neighboring countries like Bangladesh and Nepal, which rely significantly on Indian onions, were outraged by the unexpected export prohibition. The commerce ministry partially removed the restrictions in October, allowing up to 10,000 tonnes of Bangalore rose onions and Krishnapuram onions to be exported with immediate effect. After the arrival of the fresh crop, the government abolished all export prohibitions on onions, and prices in the domestic market began to ease.

Export restrictions on onions have become an annual occurrence at the start of winter, with unseasonal rains occasionally damaging the crop, causing the politically sensitive staple food’s price to skyrocket. To keep prices down in FY20, India bought onions worth $80 million from Afghanistan, Turkey, and Egypt.

In 2019, Bangladesh Prime Minister, Sheikh Hasina, raised the issue during a business forum meeting in Delhi, making the prohibition on onion exports an irritant in the bilateral economic relationship.