India is set to commence onion imports for the first time in 24 months, according to news website Bloomberg.
Falling production volumes across the South Asian nation have caused a sharp spike in onion prices over the last three months, with the average per kg price in Delhi rising from Rs16 (US$0.25) in May to Rs60 (US$0.94) in August.
Fearing voter backlash in the lead up to next year’s federal election, Indian Prime Minister Manmohan Singh has paved the way for imports to begin over the coming months.
“The government has to address this issue urgently and imports are the only solution in the short term,” Madan Sabnavis, chief economist at rating company Credit Analysis and Research in Mumbai told Bloomberg.
“Onions are a nasty thing politically and parties have lost elections in the past.”
PEC Ltd, a state-run trading company, has already sounded out overseas suppliers to deliver up to 300,000 tonnes of onions before the end of the year.
Chinese, Iranian, Egyptian and Pakistani exports are all likely to enter the Indian market, according to Bloomberg. India produced 16.65m tonnes of onions in 2012/2013, 4.8 per cent less than the 17.5m tonnes it produced in the previous season.
The Indian Government has identified a reduction in the area under cultivation as a reason for the fall in production volume, while an Institute of Social and Economic Change report has pointed to collusion amongst traders and India’s poor infrastructure as reasons for the price hike.
