Onion Export Duty Removed: A Boon for Farmers and Global Trade
Context:
Recently, the Centre decided to remove the export duty on onions. This move was a showcase of the government’s commitment to prioritising farmers’ welfare.
Relevance:
GS-02 (Government policies and interventions)
Highlights:
- The government completely abolished the 20 percent export duty on onions.
- This move was to ensure that the farmers’ receive fair prices for their produce and also to safeguard their interests while balancing domestic and international market dynamics.
Dimensions of the Article:
- About the removal of export duty
- Impact on Farmers and the Agriculture Sector
- Economic Implications
- Way forward
About the removal of export duty:
- Initially, the government had imposed a 40% export duty on onions to stabilise domestic prices. However, as onion prices began to decline, farmers faced losses due to reduced earnings.
- Recognising this, the government first lowered the export duty from 40% to 20%.
- Now, in a more decisive move, it has completely removed the export duty.
Impact on Farmers and the Agriculture Sector
- Better Market Access: It creates opportunities for the local farmers to enter international markets at competitive prices.
- Higher Earnings: Farmers will now receive improved prices for their onions as they are no longer restricted by additional costs.
- Encouragement for Production: With higher price assurance, farmers may be motivated to increase onion cultivation, contributing to overall agricultural growth.
Economic Implications
- Boost to Agricultural Exports: India is one of the largest onion producers, and this move strengthens its position in global trade.
- Foreign Exchange Benefits: Increased exports will contribute to foreign exchange earnings, positively impacting the economy.
- Inflation Considerations: While benefiting farmers, the decision will require close monitoring to ensure domestic prices remain stable.
Way Forward:
- The removal of onion export duty reflects the government’s proactive stance in balancing farmer welfare with economic interests. However, for long-term benefits, a comprehensive approach is needed, including better storage facilities, market linkages, and export diversification.
Prelims Question:
Consider the following statements regarding export duties:
- Export duties can significantly impact the pricing and profitability of Indian exports.
- Lower or no export duties can boost the global competitiveness of such products.
- Export duties are designed to protect the domestic industries from the foreign products.
How many of the above statements are correct?
(A) Only One
(B) Only two
(C) Only three
(D) All the statements
ANSWER: (B) Only two
Explanation:
- Statement 1 and Statement 2 are correct.
- Statement 3 is incorrect: Import duties are designed to protect domestic industries, whereas export duties aim to conserve natural resources, balance trade deficits, or regulate the market supply of a commodity.
Mains Question:
Discuss the potential and challenges of enhancing India’s export competitiveness in the global market. (150 words)
